semuren

• Recent Intervention Helping the Shanghai Composite [view article]

  Good article and a good point: look under the hood and know what you are buying. This goes for ETF and other funds too, not just non-US indexes.
  
  One point on the PRC market, in the A shares the is no way to go short. I think being able to short would have made the whole bear market here very different. Apr 25 12:38 PM

• Lesson Learned From China: Buy and Hope to Hold [view article]

  city, I think this is just the same post you wrote on another China related article. But you do make a very good point. While I am no fan of the CCP/PRC party-state, and tend to think of the Chinese markets (A and B shares) as a fixed game for inside players, the Fed's recent actions dug away the high moral ground of the US markets. They still might be the biggest and most liquid markets in the world but the privatize profits, socialized losses, moral hazard be damned Fed actions have brought about a convergence between the two styles of market regulations.
  
  Apr 25 12:32 PM

• Lesson From China: A Swift Decline in Commodities Could Happen [view article]

  Yes, clearly a typo is sign of defective education, an inability to write in "standard English" --whatever that might be -- and that the sky is falling. Drawing this "argument" out further, maybe speaking with an "accent" is a sign of being sub-human. Unless, of course, it is an RP accent, in which case it is elegant.
  
  Lex Luz, I suggest that you publish your data demonstrating that some people, despite on going loss, think in standard English. I am sure many researchers in cognitive science, linguistic and linguistic anthropology would be deeply interested in your results. Unless the publication happened to contain a typographical error. Then, of course, your finding would not have any value.
  
  
  
  
  Apr 25 05:40 AM

• What Happened to Crocs? [view article]

  CROX may or may not be wonderful shoes, I don't know. But do not count on them being strong based on sales in the Chinese market. The real CROX will be swamped by fakes, and the genuine article will only appeal to a very few consumers here. Apr 17 04:06 PM

• Surprise Shocks for US Earnings Mean Trouble for Asia [view article]

  alphadisclousre, your comments seem confused. First, there were no nations, in the sense that we know know them 4000 (or even 400) years ago. It is an apples vs.oranges type problem.
  
  I am not sure what you are getting at about Pettis, but I assume that you mean to make some sort argument of guild by association with the recent Bear Stern mess. I suggest that such an argument is not warranted on factual or logical grounds. So the logical problem is that just because someone worked at Bear does not mean that that person is responsible for the problems that made Bear go belly up. You might argue that about the head of the company or some other major manager or partner involved in some crucial policy that lead to the failure, but to tar everyone there with that brush is simply silly, and foolish. Second, as far as I know Pettis has been in Beijing for some 4 or 5 years, so that should distance him from the recent problems at Bear. Apr 17 10:32 AM

• GE Brings Bad Earnings to Life: Fast Money Recap (4/11/08) [view article]

  Isn't UltraShort MSCI Emerging Markets ProShares ticker EEV? EEM is the non leveraged long ETF. Apr 14 11:00 AM

• Five Ways to Invest in China and India [view article]

  CAF is about the only vehicle for non-PRC individual investors to get into the A shares market, so it is relevant to a discussion of the SSEC, though not really a proxy for the index. But FXI is all HK traded H and Red Chip shares. Even when companies are dual listed on the Shanghai and Hong Kong exchanges the shares trade a wildly different valuations. (There is even an index measuring this.) And A shares have been at a huge premium to the HK listed shares in the same companies. What FXI really trades like is a high Beta for the US market, reflecting US investor sentiment about the idea of investing in China. It is often totally out of sync with A shares. So I really have to question using FXI as the investment vehicle to capture an investment idea based on the A share market. Apr 10 01:34 PM

• Tibetan Unrest and Economic Implications: 'Nancy Pelosi's War' [view article]

  As for Mr. Zhao's comment that "Tibet enjoys substantial religious freedom." That is utterly preposterous. No one in the PRC enjoys real religious freedom. All international religious organizations are banned and the only official (not banned) religious organizations are “patriotic” one directly regulated by the party-state.
  
  As for user 168752’s comments, statements like “Tibet which has been part of China since the 12th century” parrot overly simplistic party-state rhetoric – that dominates the public sphere and educations systems in the PRC – and is based on the highly dubious assumption that state and ethnicities are the same sorts of entities now that they were in the very distant past. It does, though, reflect the view of the “man on the Beijing bus,” along with the idea that Tibetans don’t bathe, carry knives and are in need of being “civilized.”
  
  On the other hand, as user 168752 points, righteous indignation at China over the Tibet issue is sort of selective. I suspect that the Sikkim issue actually has more to do with the fact that the vast majority of the Sikkim population was similar to groups in India and different from the Sikkim monarchy. However, one might ask why Myanmar gets all the bad press it does while China is spared this level of Western critical comment. Perhaps it has something to do with the potential money to be made in China and its sheer size.
  
  I think the only value for investors this discussion has is to remind them that China’s political economy is NOT like that in the West or Japan, despite superficial similarities in the physical appearance of urban financial centers. While the HK markets are at an international standard of transparency and operation, companies based in the PRC, wherever they are listed, have to deal with this aspect of political risk. Of course, this is not qualitatively different from many other investing environments. Even in the US one has to now worry about how the Fed might next change the rules of the game
  Mar 28 07:50 AM

• Tibetan Unrest and Economic Implications: 'Nancy Pelosi's War' [view article]

  Paranoid, lacking subtly and of no use to investors or those just wanting to better understand China and Tibet. Mar 27 09:40 AM

• Will the Agriculture Boom Last? [view article]

  www.fas.usda.gov/oilse...
  
  Above is a link that deals with, among other crops, soybeans. Recent year US exports are less then recent year China imports. Imagine that more of this type of data on other crops might be found by tweaking the above URL. Also, at least in terms of soybeans and other oilseeds India did did ot seem to be a major importer. Mar 20 03:54 AM

• Will the Agriculture Boom Last? [view article]

  Another point worth mentioning is that social and political factors do not lend themselves to real increases in agricultural efficiency in China. There is a large excess population in rural areas who were kept from migrating to the cities during the Maoist period by a system of residence registration and related staples rationing. If you did not have a local residency permit you could not get local ration coupons and you had to buy them on the black market at a prohibitively high cost.
  
  While the rationing is long since past, the result is that the cities are only now starting to be swamped by rural migrants. But even this movement is not going to clear rural villages in such a way as to make way for large scale commercial agriculture. Without that happening domestic agricultural production in China can only grow so much. What is more, land seizure issues in rural and peri-urban areas are one of the primary causes of social unrest today. This scares the party and a lot of the rhetoric of the new (Hu and Wen) leadership is about trying to at least appear to be concerned about rural dwellers and rural to urban migrants.
  
  There are also the issues of climate and topography that limit the ability of China to really increase food production, despite the lingering political importance of the concept of food self-sufficiency.
  
  The financial infrastructure in contemporary China, giving cheap capital to state-linked companies through negative real interest rates on deposits and politically directed bank lending, among other methods, creates an economic incentive to develop capital intensive industry. This, in turn, further adds to the already dire pollution and environmental degradation problems, and none of that bodes well for agriculture.
  
  The political system also rewards official who can manage these sorts of high profile capital intensive industrial projects. It cannot do so for real, qualitative, improvements, in agriculture since those would involve getting rid of surplus rural population and instituting some sort of large scale commercial farming (if topography and environmental conditions even allowed for this).
  
  Along these lines here is a very interesting quote:
  
  hardassetsinvestor.com...
  
  
  Ashmead Pringle (GreenHaven Commodities Service): “Seventy percent of the world’s fresh water goes to agriculture; it takes 1,000 tons of water to make a ton of grain and 18 tons to make a ton of steel. So the countries that are industrializing are likely to use their resources for industry and import their grain. The U.S. is going to be able, I think, to sell all they can grow for some period of time.”
  
  
  This quote get at two points I am trying to make above: 1) The physical environment limits the potential for improvement in agricultural yields, here in terms of water which is VERY scarce in North China; and 2) the political economic system in China also limits improvement in agriculture. The performance of and official with a successful steel plan in his district will look good, while that of one who introduced large scale commercial agriculture and created the attendant social disruption among the rural population will not.
  
  For anyone interested there is a nice survey in the economist this week that deals with some of these issues.
  Mar 17 01:54 AM

• Will the Agriculture Boom Last? [view article]

  Here is an article that give a more comprehensive picture of the ag situation in China and its relation to imports.
  
  ipsnews.net/news.asp?i...
  
  ECONOMY-CHINA: Staring At Grain Imports
  By Antoaneta Bezlova
  
  BEIJING, Feb 26 (IPS) - With global food prices on an upward spiral, China is facing renewed fears that its growing demand for grain to feed the world’s largest population may lead to imports from international markets, driving prices higher and spurring further food inflation.
  
  The resurging "threat of China’s food security" may have induced more fatigue than alarm if it was not coming at a time of unprecedented scarcity of arable land, which is increasingly being converted to grow biofuels, and because of fresh challenges posed by global warming.
  
  With its natural constraints -- it has to feed a fifth of the world’s population with less than one-seventh of the global farmland -- and its surging demand, China finds itself in the middle of a raucous debate about the future of global food security.
  
  Since United States environmentalist Lester Brown stirred public imagination in 1995 with his apocalyptic predictions of China’s rising food hunger, the country has fought recurrent accusations that its demand may prove catastrophic by swamping world grain markets and causing food shortages in impoverished developing countries.
  
  Delivering bumper harvests and shunning large imports have so far been the preferred ways for Chinese officials to demonstrate the country’s determination to continue with its long-term policy of self-sufficiency. The trend of increased annual harvests has run uninterrupted since 2004, clocking in more than 500 million tons of grain in 2007, including rice, wheat, corn and soybean.
  
  "China is not a precipitator of the mounting increase in global wheat prices, but an important stabilising factor for it," Ding Shengjun, an official with the State Administration of Grain said in Beijing last week, responding to speculations that grain may follow the upward trajectory of oil. China’s unquenchable thirst for oil has been one of the main factors behind the surge of oil towards the sensitive 100 US dollars a barrel mark.
  
  "The trend in China -- year-on-year grain output increases, a balanced supply-demand market, improved reserves and mild structural grain price increases -- is in sharp contrast with the global downturn in grain output and reserves," Ding said.
  
  He went on to suggest that Beijing has tolerated small quantities of grain imports to diversity its domestic food supply while remaining largely self-sufficient.
  
  Nevertheless, Chinese analysts have grown uneasy about the country’s increasing dependence on imports to satisfy demand for soybeans. Driven by its growing demand for meat in recent years, the country has emerged as the world’s biggest importer of soybeans and vegetable oil.
  
  Before 1995 China was a net exporter of soybeans but in 2007 China imported more than 30 million tonnes of the commodity, which it uses mainly for animal feed. The demand reflects the country’s dietary changes resulting from greater prosperity in cities and towns where people these days consume more meat.
  
  But the Chinese diet’s shift towards more meat has also boosted grain consumption, raising expectations that the country may be soon forced to import corn too. It takes four kilograms of grain to produce one kilogram of meat.
  
  "I believe there is an ongoing soybean crisis, which is now affecting China’s entire food security and may even prove dangerous to the equilibrium of the whole economy," says agricultural market watcher Liu Chaoyang.
  
  "Because of the country’s excessive dependence on imports for soybeans, China’s self-sufficiency rate is no longer the mandated 95 per cent but somewhere around 90 per cent."
  
  To promote self-sufficiency, Beijing has done away with a policy spanning two thousands years of collecting grain tax from the peasants and has resolved to provide farmers with more subsidised fertilisers and seeds.
  
  Reacting to rising global prices and inflation worries at home, China also raised export taxes and imposed export quotas on a range of grains and flour in December. Nevertheless, China’s inflation -- driven by food prices surges, is running at its highest in 11 years. China’s consumer prices in January surged 7.1 percent from a year earlier.
  
  The food situation has been exacerbated by devastating snowstorms in January that have killed farm animals and damaged crops across a large part of the country. Partly because of the storms, China’s food prices in 2008 have risen 18 percent, higher than the 13 percent increase of grain commodities in Indonesia and Pakistan, and well above the 10 per cent increase in South America and other developing countries.
  
  The scourge of high prices and natural disasters occurs at a time of rapid loss of arable land, prompting some Chinese analysts to speak of the "global scramble for farmland".
  
  While Beijing is said to control the amount of cropland taken over to produce biofuels, in the last decade the country has lost 5.5 percent of its arable land to desertification and industrial expansion.
  
  "Nearly 14 years have passed since Lester Brown raised the alarm on China’s land constraints but his warning has not lost its validity," says Song Yanming, member of the China National Association of Grain Sector.
  
  Analysts warn that although China has managed to maintain a balance of supply and demand in three of its main grain commodities – wheat, rice and corn, the increasing imports of soybeans can at any moment disrupt its fragile equilibrium.
  
  Some agricultural experts have even suggested that China should use its ample foreign exchange reserves, which stand at more than 1.5 trillion US dollars, to buy soybeans on the international market and raise the domestic soybean reserves to 50 million tonnes -- an equivalent to a year of China’s national soybean consumption.
  
  "We can’t allow the soybean crisis to become the Archimedes point that would pry the Chinese economy," Wan Xiaoxi, an agricultural analyst with China Southern Fund, wrote in the China Business News.
  
  
  From this I think that we can see that soybeans are already a major import ag commodity here. And that grains such as wheat, rice and corn are imported. What I think is most worth not is how changes in diet in China are likely to play out. Soybeans fed to animals as people shift to eating more meat is mirrored in increases in dairy consumption. Chinese TV is now filled with ads for breakfast milk and bread. The products are thought of as Western, hip and healthy. While in North China people are already accustomed to eating wheat and corn (more the former than the latter) milk drinking is new and those cows have to eat something.
  
  Mar 17 01:20 AM

• Will the Agriculture Boom Last? [view article]

  "Much is said about China-India demand - both countires [sic] are not only self sufficient but are actually exporters of food. "
  
  I think sb-tiger's statement above is misleading if not just wrong. Below are some news clipping dealing with China's ag imports form the USA.
  
  
  www.iht.com/articles/2...
  
  "Chinese soybean imports, mostly from the United States and Brazil, have almost doubled since 2003-04. Imports from January to July rose 2.6 percent to 16.9 million tons, with 7.8 million tons coming from America, according to customs data. The United States is the world's largest producer." ---Bloomberg News Published: August 22, 2007
  
  
  "China, the world's largest soybean importer, gets 60% of its soybean supplies from overseas, mostly from the U.S., Argentina and Brazil." ---DOW JONES NEWSWIRES August 22, 2007 9:12 a.m.
  
  www.ers.usda.gov/Publi...
  
  This USDA report is a bit old [1996], but it give some perspective when evaluating claims that China is not a food importer.
  
  "By the year 2005, China will be a net importer of 32 million tons of grain annually, as the country’s demand for grain continues to outpace domestic supplies. That’s according to The Future of China’s Grain Market, a new report from USDA’s Economic Research Service. The United States, as a major grain exporter, has a vital interest in China’s grain import demand.
  
  China has a large agricultural sector and is a major grain producer. China has participated in the international grain trade both as a buyer and a seller. However, it is doubtful that China’s farmers will be able to keep pace with population increases and growing domestic demand for feed grains to produce meat, eggs, and milk products.
  
  In the last two decades, China’s grain trade with the United States and the rest of the world expanded dramatically. Since 1993, China has shifted from net exports of 7.5 million tons of grain to net imports of 15.5 million tons. China’s grain self-sufficiency is likely to decrease from 95 to 91 percent in the next decade. China’s Academy of Science has estimated that grain imports could reach 45 million tons per year, 13 million tons above USDA projections.
  
  The Chinese economy is expected to grow rapidly in the next few years, with the an annual growth rate projected at 8.8 percent from 1996 to 2000. The rate of growth is then expected to slow to about 7.5 percent annually during 2001-2005. Per capita incomes are expected to rise accordingly, which will drive consumer demand for grain and livestock products.
  
  Most of China’s arable land is already under cultivation, and additional land can be brought into production only at high cost. Because economic expansion is taking some of China’s farmland, it is likely that the total area sown to grains will decline in the next decade.
  
  China’s grain yields have considerable potential to increase, with high-yielding seed varieties, better fertilizers, and more efficient use of irrigation water and pesticides.
  
  The volume of U.S. grain exports to China has been volatile during the last 20 years, peaking at 9 million tons (63 percent of Chinese grain imports) in the early 1980’s. As recently as 3 years ago, China had net exports of 7.5 million tons of grain.
  
  U.S. sales of all farm products to China has also been volatile, increasing from less than $400 million in 1993 to more than $2.5 billion in 1995. "
  
  news.xinhuanet.com/eng...
  
  "BEIJING, Jan. 6 (Xinhua) -- China bought from abroad 1.29 million tons of grain (including rice, wheat and maize, excluding soy beans) in the first 10 months of 2007, a decline of 58.6 percent from the same period of the previous year.
  
  Customs sources said the arrivals were valued at 420 million U.S. dollars, down 39.4 percent.
  
  The sources ascribed the import reduction to narrowed gap between supply and demand at home and price hikes on world grain markets.
  
  A decrease in grain yield worldwide caused by unfavorable weather and growing demand for cereals used for bio-fuel production conspired toward continuous price hikes.
  
  Between January and October, barley imports were valued at 278.6 U.S. dollars per ton on average, a rise of 49.4 percent on the same period of 2006, rice and paddy imports were priced at 456.6 dollars per ton on average, up 18.1 percent.
  
  The mounting prices dampened domestic demand for imports, which was also driven down by more grain output at home, the sources said.
  
  Meanwhile, shipping charges also went up internationally, which also gave rise to cost of grain import, the sources added.
  
  According to customs data, Australia, Canada and Thailand accounted for 90.3 percent of China's grain imports in the first 10 months of 2007.
  
  From January to October, China bought 457,000 tons of grain from Australia, down 74 percent, 356,000 tons from Canada, down 24.4 percent, and 351,000 tons from Thailand, down 36.1 percent."
  
  news.xinhuanet.com/zhe...
  
  The link just above is to "The Grain Issue in China [2002]." Saying it is a bit of a polemical, for party-state grain self-sufficiency,is an understatement, but even it has to admit the existence of a grain imports.
  
  This is not my area of expertise, so I do not have good data for Chinese (let alone Indian) agricultural imports, but it would be very nice is someone who does have such data would post it. Mar 17 12:31 AM

• Global 'Oil Shock' Rattles World Stock Markets [view article]

  Though I tend to find your articles interesting and thought provoking, I agree with Skjellifetti above: "When an author can't be bothered to fact check the attribution of simple quotes, it throws all the rest of the analysis into doubt." This is not just the case with mis-attributing the Carville quote to Rubin, and getting the wording a little off -- Carville said he wanted to come back as the bond market because it "can intimidate everybody.” You also keep calling the Shanghai market the “Red Chip” market. When you did this in an earlier post, in December 2007, I pointed out that Red Chip and H shares trade in Hong Kong, and A and B shares trade in Shanghai. That is a pretty basic terminological fact, and making those sort of errors just undermines your overall credibility.
  
  In a sense it may not be that important since I know what you mean when you write the Shanghai Red Chip market [Shanghai A shares], but maybe not everyone does. It seems to me that that sort of error is one the editors at Seeking Alpha might what to comment on/correct.
  Mar 16 03:40 AM

• China Will Feel the Brunt of This Demographic Shift [view article]

  While I normally like your posts Optima is correct here and the idea that "non-religious women in China don't want to have kids" is nuts. Certainly, as women become wealthier, more educated and more urban ideal family size tends to drop, but that is not the same as not wanting to have kids. What is more, there is still quite a bit of pressure to have a son, even among the wealthy urbanites. We can see this in the fact that some groups are allowed to have a second child only if the first child was a girl! While the propensity of girls to send money back to the rural family from factory jobs (and that of boys to drink, gamble and whore it away) has made female children's status somewhat better in the eyes of rural Chinese, the need to produce a son in rural families is still truly compelling. People run from their homes and face fines, persecution and all manner of hardships so that they can have a son. And there many, many, many unregistered second and third children all over the country. Just downstairs at the little barbershop near my building the (migrant) owners have two or three daughters, but their youngest is a son. The dependency ratio in China is going to be a problem, but as Mike Pettis pointed out recently (linked in the article above) eliminating or further relaxing the one-child policy might make it worse in the short run. Mar 03 10:15 AM

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