PowerShares Gldn Dragon Halter USX China (PGJ)
-
Quote & Analysis
-
Forum
Trading Center
Loading...
Symbols:
PGJ Forum Topics
- All Comments on PGJ
- General Discussion on PGJ
- China: Post Olympic Slowdown [view article]
- Can China Carry the Post-Olympic Torch? [view article]
- U.S. Credit Woes Spill Into China [view article]
- China and Starbucks' Late Stage Growth Obesity [view article]
- Is the China Growth Story Coming Unglued? [view article]
- China: What Comes After the Olympics? [view article]
- China's Looming Hangover? [view article]
- Commodity Carnage: Where to Turn Next? [view article]
- Fast Food Is Becoming More Expensive in China [view article]
- China's Negative Economic Outlook [view article]
- China's Impending Financial Crisis [view article]
- China: Olympic Fever and the Market [view article]
loading ...Recent PGJ Articles
- Can China Carry the Post-Olympic Torch?
- U.S. Credit Woes Spill Into China
- China: Post Olympic Slowdown
- Is the China Growth Story Coming Unglued?
- China: What Comes After the Olympics?
- China and Starbucks' Late Stage Growth Obesity
- Fast Food Is Becoming More Expensive in China
- China's Looming Hangover?
- China: Olympic Fever and the Market
- Time to Avoid the Stock Markets Altogether
- Full List of Articles »
Trading Center
Hedge Fund Jobs
Job Seekers: Search jobs by category, get job alerts by email or live feed, apply online See full list of jobs »
Employers: See all recruitment options, get applications online or by email Post a job »
Six Reasons To Buy China Soon [view article]
China is a Tiger - NOT a Dragon.In terms of Inflation India is probably nearer 15% - 16%
It has to be said that 1000% increase in property price also reflects a very worrying statistic. China has seen 500% gains. Anything over that (regardless of fundamentals) really reflects enviroment of extreme inflation.
I also believe that India and China are two completly different economies. And that analysing the future of one to predict the other is useless. I believe the single most important thing about where China is heading has to do with the huge reserves the government has and the pro-growth/pro-employm... government officials back-pockets policies.
China just spent 80 billion USD on the Olympic Games to show the rest of ther World its power etc etc.
They really would not think twice about spending 200-400 billion USD out of the 2+ trillion they have to stimulate demand during the next few years of hardship.
China's cushion is huge.
Reply
Six Reasons To Buy China Soon [view article]
I am not bullish on india, but i kind of disagree with "From India" on that inflation being 25%.i hope he is not including the price of a house...which has gone up 1000% in some locations in the past 4-5 years.
according to me the biggest cost of of living in india is commodities and energy.
and if i am not wrong, the cost of commodity and energy is almost same all over the world (+-5%), so if inflation in india is 25%, then it has to be atleast 15% all over the world.
i am not in india but i have family and friends and if we exclude the housing thing, inflation is definitely not 25%, yes it is more than 7-8%, but that is mostly due to commodities and energy skyrocketing all over the world.
by the same measure real inflation must more than 6-7% even in usa. (cost of gas itself is more than 30% YoY)
another thing, if the currency of india is not depreciating against USD, then it does not matter if inflation is 20% or 40%, for a non-indian investor.
and in the past 2-3 years, indian currency has appreciated against the dollar.
From India: you sound like an elitist.....when you say wages are rising....what do you expect, inflation is high but wages to stay stagnant?? Reply
Six Reasons To Buy China Soon [view article]
Agree with views of "From India." Recent history suggest China is correlated with India so in the next year or two China like India is unlikely to perform from a equity investment viewpoint, or you have to be cautious and sceptical. Long term everybody agree India and China have a bright future, grow faster than the developed economies. ReplySix Reasons To Buy China Soon [view article]
Anyone who thinks about buying India now is a fool. I live in USA and I am currently vacationing in India. Its true that People are spending like crazy. But look at the prices of everything around here, they are going over the roof. I suspect the real inflation here is around 25%. Wages are increasing, and the demand for everything is way up. Heavy urbanization, extreme pollution and migration of farming people from Rural areas is definitely going to weigh heavily on food prices. Inflation is going to kill this economy and I dont suspect it is going to moderate soon (even though the recent government prediction is that it will moderate by 2009 second quarter to around 8%). People saving in the banks are earning a negative real rate of return when you look at Indian bonds yielding about 10% currently. I dont know how long people will still keep saving their hard earned cash in banks. (As you may have noted, the Real Estate developers are supposed to be scrambling to raise cash for their projects)I believe the Risk free rate to be around 16% with inflation around 13% (Govt measure, and also without any regards to current Domestic Bond Yields and a paltry risk premium of 3%). With a COE of around 16% (Without even considering a Country premium) , your risk is not rewarded unless you make more than 16% and I dont think that it is an easy task to find decent valuations.
If you ask me, even the domestic investors are lame, without any understanding of risk-reward. I will refrain from investing in Indian stocks that are Export oriented at the least. However, the domestic sector may still be a viable option (if the ADRs are available).
I am negative India. And my advise is to refrain from buying at this time. Wait, they have a lot of scope on downside. The risk reward ratio is totally skewed. Reply
Six Reasons To Buy China Soon [view article]
Repudiation by the Government of China of $260 billion of its sovereign debt and the pending reclassification of the Chinese government’s sovereign credit rating into ‘Selective Default’. --------You have to make it clear that this concerns the long-repudiated debt of the old "Republic of China".
Maybe the court case and the publicity will make the government change its mind and decide to honour these old debts after all.
That would be hugely positive. Reply
Six Reasons To Buy China Soon [view article]
The following should help shed some light on the question: I agree with Mr. O'Brien's analysis.In my view, China may be down a couple of years, just like the rest of the world. Then it would be the time to buy China, but not now.
China's Negative Economic Outlook
by: Kevin O'Brien posted on: July 02, 2008 |
Certain recent developments in conjunction with prevailing global economic trends appear sufficiently serious to warrant a current economic assessment of the People’s Republic of China [PRC] and a review of China’s sovereign credit risk.
U.S. ECONOMIC TRENDS
The U.S. economy is experiencing a significant contraction as U.S. consumer spending continues to decline. Housing prices have plummeted as the rate of both residential and commercial mortgage delinquencies continues to increase. At the end of the first quarter of this year, nearly nine million borrowers held mortgages exceeding the value of their homes, and this number is expected to increase significantly. The U.S. economy shed 80,000 jobs in March according to the U.S. Department of Labor, the largest loss in five years. Average U.S. household debt is 85% higher than in 2001, and continues to increase as consumers take on greater levels of debt in response to rising commodity prices, particularly food and energy costs. Delinquency and default rates for credit card debt, automobile loans and student loans continue to rise rapidly, as delinquencies have increased from less than $300 billion in 2005, to $715 billion in 2008; representing an increase of nearly 150% within 36 months. The present economic stress will likely be compounded by an expected record number of bank failures. U.S. consumer spending is predicted to continue to decline as consumers experience increasing commodity price inflation and credit contraction.
In a report dated May 19th, Oppenheimer analyst Meredith Whitney warned:
The real harrowing days of the credit crisis are still ahead of us and will prove more widespread in effect than anything yet seen. Just as strained liquidity pushed so many small and mid-sized specialty finance companies to the brink, we believe it will do the same to the U.S. consumer. We believe losses will only accelerate further and far worse than the most draconian estimates.
Ms. Whitney also estimates about $2 trillion of credit card lines will be removed by 2010, cutting the credit available to U.S. consumers by nearly half.
CHINA’S ECONOMY DEPENDENT ON U.S. CONSUMER SPENDING
The significance of the negative short- and mid-term U.S. economic outlook is especially troubling to China’s export sector, which is the primary hard currency earnings producer for the Chinese government. As U.S. consumer spending continues to retreat, the economic effect is anticipated to produce severe structural pressures on China’s export-driven domestic economy due to significantly decreasing external demand.
PERVASIVE INFLATION IN CHINA’S DOMESTIC MARKET
China’s economy continues to experience pervasive inflation which is particularly manifest in such consumer sensitive sectors as energy (e.g., petroleum prices which have more than doubled over the past twelve months) and food staples (e.g., the price of food, which increased 23% just during the month of February). Chinese consumers have benefitted from the state control of energy prices, which has also resulted in the loss of over 50% of the value of Sinopec shares within the last six months as the government continues it attempt to control fuel costs for consumers. Such trends are unsustainable for a country with a population in excess of 1.3 billion and which imports approximately 78% of its petroleum. Data published by the U.S. Energy Information Administration indicates that China’s increase in oil demand represents a majority of the total global increase in demand. With increasing demand and relatively flat domestic production since 1986, China’s reliance on petroleum imports is expected to continue, subjecting the government to additional economic stress.
In its semi-annual Economic Outlook published this month, the Paris-based Organisation for Economic Co-operation and Development [OECD] expressed concern regarding the threat posed by persistent inflationary pressures manifest in China’s domestic market. China’s consumer price index was officially reported at 7.7% in May and 8.5% during April, and remains above its January level of 7.1%. Taking into account China’s industrial consumption of commodities and that China produces very few commodities domestically and is therefore reliant on global sourcing at prevailing prices to procure raw materials for its manufacturing industry, the OECD expects wage and price inflation to erode China's export competitiveness.
The OECD report states:
Coupled with ongoing weakness in external demand, exports and the pace of market share gains are projected to slow markedly.
Such an outcome raises the risk of political instability resulting from increases in urban unemployment and other factors as discussed in this assessment.
ACTION
The following trends and events are identified as material to an assessment of China’s near- and mid-term economic outlook:
The extent of dependency of the Chinese government on hard currency earnings derived from manufactured exports supported largely by U.S. consumer spending.
The depth of the retreat in U.S. consumer spending and the high probability of a prolonged contraction of the U.S. economy.
The fundamental dynamics responsible for China’s domestic wage and price inflation and the increased risk of political instability attributable to the rising cost of imported consumer and industrial commodities, reduced demand for export products, and a significant increase in urban unemployment.
The rate of increase of China’s petroleum consumption and the dependency of China’s export manufacturing sector on petroleum imports.
China’s ability to maintain the global competitiveness of Chinese manufactured goods in the face of rapidly increasing transportation costs.
Government debt statistics evidencing an unsustainable overreliance on debt financing, particularly short-term debt, to sustain economic growth.
Repudiation by the Government of China of $260 billion of its sovereign debt and the pending reclassification of the Chinese government’s sovereign credit rating into ‘Selective Default’.
Upon an evaluation of the foregoing, Sovereign Advisers issues a Negative Outlook for the domestic economic prospects of the People’s Republic of China and a Negative Outlook for the safety and performance of government bonds issued by the People’s Republic of China.
Reply
Lutz
Six Reasons To Buy China Soon [view article]
Great Article! I have to disagree that over the long run a super high savings rate is not always a good thing...After all, how do you get people to spend money in the face of a downturn if they save so much??...Japan couldn't figure it out throughout the 1990s. China's obviously not facing that right now, but it's something to keep in mind.I do have to say that you have to pick Chinese stocks very carefully. First, I don't believe any numbers provided by Chinese companies that aren't traded on an SEC regulated exchange. Also, many Chinese companies are situated in very precarious competitive positions. These companies are trying to "move up the value chain" and produce more technologically advanced products. This may be great for China as a country but could present a difficult scenario for investors since these firms have no history of producing such products so it may be difficult for investors to judge the company's competence. Also, China's companies are going to start competing more directly with firms firms in many developed countries especially those in southeast Asia. How that competitive landscape plays out often very difficult to determine especially given uncertainty in the international currency markets
I know I've been rambling but I just want to say one last thing: A growing GDP does not necessarily mean success for investors. Jeremy Siegel in his book "Future For Investors" cites a study that found that stock returns are actually negatively correlated with gdp growth given that gdp growth is positive. Reply
Huckleberry
Six Reasons To Buy China Soon [view article]
Reason #7b: The "Free Market Economy" in that Communist country is, in most respects, freer than ours... ReplyTalk
Six Reasons To Buy China Soon [view article]
But how real is that GDP? - how much of the 40% fixed asset investment contribution is the good stuff? ReplyWant to See a Bursting Bubble? [view article]
The Chinese are said to save 35% of their income. US workers are now in a negative saving posture. Their stock market has collapsed abjectly. Our market is toughing it out. Something does not compute here. ReplySix Reasons To Buy China Soon [view article]
You could add reason #7, they aren't governed by U.S. politicians. ReplyWhich Asset Classes Should Investors Choose? [view article]
Agree with author that decoupling has not taken place. Short term strength in dollar through year end. 2009 will see declining dollar again, rising commodities. ReplyThe Consumer Driven Commodities Bull [view article]
Great article, I think we also need to take into account the effect of wealth effect spending. Many "millionaires&quo... were minted in this multi-year bull run. Many people have now lost their savings in the recent crash. I wonder to what extent this will negatively effect consumption, which you point out to be 37% of GDP. ReplyWant to See a Bursting Bubble? [view article]
But China will perform sooner rather then later.Its my pick for the next year.
Visit a China related site at investinchinastocks.bl... Reply
Want to See a Bursting Bubble? [view article]
rlirph, this chart in the article can be of very valuable quality.It does in effect show the most likely supoort level and possible capitulation point in the market.
Also it puts the 'pyramid selling scam' we have seen over the last few years in China into prospective.
Take a look at the chart, especially the breakout point high in 2001.
Reply