Jpmorgan China Growth & ... Share Discussion Threads

[loganair] 13/10/2023 08:10

China's economy has been hit on several fronts this year. The currency hit a 16-year low, investors have dumped the country's stocks and bonds, the property sector is imploding and disinflation is threatening to morph into outright deflation.

Annual producer price inflation has been negative for a year, although consumer inflation only briefly dipped below zero in July. September's PPI and CPI readings on Friday will be closely watched for signs that the economy is reflating.

[loganair] 19/9/2023 13:51

For several years I've been posting that China will continue to gently and slowly reduce their US Treasury holdings by letting them mature and not reinvesting this money back into Treasuries rather than outright selling any U.S. Treasuries, however will not do much until they reduce them to between $700bln to $800bln before making their real move, what ever this move is going to be.

China continues to reduce its holdings of US Treasury's...


Jul - $821.8bln
Jun - $835.4bln
May - $846.7bln
Jan - $859.4bln

2022:

Nov - $870.0bln
Oct - $877.8bln
Sep - $933.6bln
Aug - $971.8bln

[loganair] 08/9/2023 06:41

China's sputtering economy:

China remains a drag on sentiment and market performance.

The onshore yuan fell on Thursday to its weakest since December 2007, nudging 7.33 per dollar and intensifying the pressure on authorities to arrest its decline. Unfortunately for Beijing, it also highlights the limited options available.

The sputtering economy needs stimulus, but any meaningful policy easing will almost certainly push the yuan even lower. The weaker the yuan gets, the greater the risk of investors pulling money out of China and exacerbating a doom loop of FX depreciation, asset market weakness and capital flight.

[loganair] 29/8/2023 07:33

The reaction of Chinese stocks on Monday to new measures from Beijing to boost local markets at once emboldened the bull and bear cases - bulls will point to the rise of more than 1% for the best day in a month, while bears will note that stocks had risen 5.5%, so the close was extremely lackluster.

Despite the latest steps to boost confidence, foreign investors offloaded a net 8.2 billion yuan ($1.12 billion) of Chinese stocks via the Stock Connect on Monday, and have now been net sellers in 15 out of the last 16 sessions.

This helps explain why the yuan remains under sustained downward pressure, languishing around the weakest level of the year against the dollar near the key 7.30 level. A break below that will take the yuan into territory not recorded since late 2007.

[loganair] 24/8/2023 07:54

BRICS countries now = 40% of world oil production and over 30% of gas production and by 2050 is forecast to have double the GDP of the G7 + EU.

[loganair] 24/8/2023 07:48

Argentina, Egypt, Iran, the United Arab Emirates and Saudi Arabia will become new members of BRICS.

The geographical factor was among the main selection criteria. Choices were made in order to maintain the regional balance inside the group. In accordance with the principle, the membership of one more African country is now under consideration.

Also, the government of Brazil would also like to see Indonesia as a member of BRICS, but the country is not yet ready to join the group.


BRICS will not have to change its name - an acronym for its current members Brazil, Russia, India, China and South Africa - to reflect the accession of new countries, South Africa’s BRICS Sherpa Anil Sooklal said.

"I don't think so, because BRICS has established itself as a global brand," the diplomat said. "Everyone knows BRICS."

"That term is acceptable globally, and at no stage during our discussions at the level of Sherpa or foreign ministers or leaders that the issue of a name change ever arise," he added. "I think BRICS now is not just about the five countries. It's about all that are in the BRICS family."

[loganair] 22/8/2023 06:29

China remains underwhelming:

To be sure, there aren't many obvious reasons for the rot to stop other than the bearishness may be overdone in the short-term - the MSCI Asia ex-Japan index is down eight days in a row, its longest losing streak since January 2020, and China's blue chip index has fallen nine of the last 11 sessions.

The flow of economic data and policy actions out of China remains underwhelming. The latest figures show land sales revenues for the government fell for a 19th straight month and overall fiscal revenue growth slowed in July.

Foreigners sold Chinese stocks for the 11th day in a row on Monday, dumping nearly $1 billion via the Stock Connect, and reaction to the central bank cutting the one-year loan prime rate by 10 basis points and leaving the five-year rate unchanged was one of overwhelming disappointment.

The spread between Chinese and U.S. 10-year bonds widened to 180 basis points on Monday, the biggest gap since January 2007 and a growing source of severe downward pressure on the yuan.

State-owned banks are actively supporting the offshore yuan, sources say. If the yuan continues to fall, however, speculation is sure to mount that more direct FX intervention could follow from Beijing via the sale of U.S. Treasury bonds.

[loganair] 16/8/2023 15:28

For several years I've been posting that China will continue to gently and slowly reduce their US Treasury holdings, however will not do much until they reduce them to between $700bln to $800bln before making their real move, what ever this move is going to be.

China continues to reduce its holdings of US Treasury's...

Jun - $835.4bln
May - $846.7bln
Jan - $859.4bln

2022:

Nov - $870.0bln
Oct - $877.8bln
Sep - $933.6bln
Aug - $971.8bln


To think just 1 year ago China held $296bln more US treasuries than the No.3 holder UK, today its down to $163bln.

In June, the countries with the biggest increase in their U.S. Treasury holdings are U.K., Canada, France and Germany - all servant countries of the U.S. .

The biggest decrease being Hong Kong, Singapore and Saudi Arabia.

[christo21] 16/8/2023 14:31

China is a mess, economic data weak. Not a great time to own Chinese equities. But the companies in JCGI are awesome, Baba and Tencent are china's Apple and Amazon. They'll recover after to ATH', just have to wait for this to play out

[loganair] 16/8/2023 09:00

The word 'crisis' should always be used responsibly and judiciously when covering financial markets, business and economics, but are we at that point now with China?

Developments in the last 24 hours from the world's second largest economy - another string of top-tier data 'misses', a shock interest rate cut and an abrupt announcement that (record high) youth unemployment data will no longer be published - suggest we might be.

[loganair] 14/8/2023 17:45

One of China’s largest private wealth managers has triggered fresh anxiety about the health of the country’s shadow banking industry after missing payments on multiple high-yield investment products.



The turmoil at Zhongzhi Enterprise Group Co., a secretive financial conglomerate that manages about 1 trillion yuan ($138 billion), surged to the fore after several of its corporate clients disclosed overdue payments by a trust unit. In a sign that Chinese authorities are worried about potential contagion, the banking regulator has set up a task force to examine risks at Zhongzhi, according to people familiar with the matter.

While little known outside China, Zhongzhi is among the biggest players in the country’s $2.9 trillion trust industry, which combines characteristics of commercial and investment banking, private equity and wealth management. Firms in the sector pool savings from wealthy households and corporate clients to offer loans and invest in real estate, stocks, bonds and commodities.

One of the nation’s largest developers, Country Garden Holdings Co., is on the brink of default, while loans extended by Chinese banks fell to the lowest level since 2009 last month in a sign of waning demand from businesses and consumers. Zhongzhi’s trust unit bought stakes in real estate projects last year, betting on a market rebound that has so far failed to materialize.

Chinese stocks slumped on Monday, with the CSI 300 Index falling for the fifth time in six sessions, and the yuan depreciated toward its weakest level this year. While markets took some solace from news of the Zhongzhi task force, analysts at JPMorgan Chase & Co. warned that the turmoil may contribute to a “vicious cycle” for real estate financing in China.

“The biggest problem now is how to isolate the risks associated with Zhongzhi group so that it doesn’t cause confidence of the entire trust industry to collapse,” said Shen Meng, a director with Beijing-based Chanson & Co. “If the situation continues to worsen, expect the scale of the risks to be no less than when a leading property developer defaults.”

A total of 106 trust products worth 44 billion yuan defaulted this year through July 31, according to data provider Use Trust. Real estate investments accounted for 74% by value.

Three firms said late Friday they failed to receive payments on products issued by companies linked to Zhongzhi, including Zhongrong International Trust.

Zhongzhi is the second-largest shareholder of Zhongrong Trust, with its ownership at around 33%. The conglomerate also holds stakes in five other licensed financial firms, including a mutual fund manager and two insurers, and invested in five asset management companies and four wealth units, according to its website. It also controls listed companies and owns 4.5 billion tons of coal reserves among its industrial operations.

Zhongrong Trust alone has 270 products totaling 39.5 billion yuan due this year, Use Trust data showed. The average yield on those products amounted to 6.88%, compared with the benchmark 1.5% one-year deposit rate paid by banks.

The prolonged slump in China’s property sector has brought previously sound property developers to their knees. The sector is caught in a vicious cycle where failing developers put homebuyers off purchases, which then crimps cash flow of companies. Home sales tumbled the most in a year in July.

The missed payments show “how the real estate’s liquidity problem can create a domino effect on other sectors, including the trust industry,” said Gary Ng, senior economist at Natixis. “It would not be surprising to see more trusts with a high asset allocation towards real estate face payment issues.”

Nacity Property Service Co. and KBC Corp. first announced news of the delayed payments by Zhongrong International Trust in statements Friday evening. KBC, a carbon products manufacturer, said in a statement to the Shanghai Stock Exchange that the delayed payments were tied to 60 million yuan invested with Zhongrong Trust.

Another listed company said on Friday that payments on one wealth product it bought from a Zhongzhi unit had become overdue this month and it will take legal measures to recover investment losses.

Zhongrong Trust, which managed 786 billion yuan in assets as of Dec. 31, said its businesses faced a “relatively high level” of credit risks in 2022 as counterparties’; liquidity pressures and refinancing difficulties eroded their ability to honor payments, according to its annual report for the year.

Real estate accounted for 11% of Zhongrong Trust’s trust assets, following 42% in industries and 33% in financial institutions, according to its annual report. The company was previously fined 200,000 yuan by regulators for investing in a property project that lacked relevant approvals, and pledged to improve compliance.

Trust firms, including Zhongrong Trust and MinMetals Trust Co., have bought stakes in at least 10 real estate projects last year, betting that unfinished homes will eventually yield cash to pay off some of the $230 billion in property-backed funds they have issued to investors.

[loganair] 10/8/2023 08:17

Renewed tension between the United States and China could be back on investors' radar, with the White House detailing plans to prohibit some U.S. investments in Chinese technology, and requiring that the government be notified of other investments.

[loganair] 09/8/2023 14:45

That's why I posted 'Circa' could be a little higher or lower, nobody could ever be certain of the final low or high for and share price.

[spooky] 09/8/2023 12:07

I wasn't dismissing the trajectory, purely the apparently arbitrary selection of 150.

[loganair] 09/8/2023 11:31

spooky - With the news I've been posting in my opinion very tangible reasons why I firmly believe if patient will be able to pick up shares in JCGI for circa 150p

[spooky] 09/8/2023 09:53

Is that based on anything tangible other than wetting your finger and sticking it in the air?

[loganair] 09/8/2023 09:22

I've heard that the Chinese authorities are becoming increasingly worried that their economy is slipping into what happen in Japan in the 1980's/1990's.

I still believe if very patient investors will be able to pick up shares in this trust for circa 150p.

[loganair] 08/8/2023 08:10

Chinese factory activity fell for a fourth straight month in July, further depressing the outlook for growth and increasing pressure on Beijing to inject substantial stimulus. The services and construction sectors are also teetering on the brink of contraction.

Citi's Chinese economic surprises index remains deeply negative, but has crept up off its lows recently. At -54.7, it is at its 'highest' level since June 30, but will soon be heading lower again if Tuesday's trade data disappoint.

[loganair] 24/7/2023 07:41

It's a different story in China - the economy and markets are badly underperforming, growth forecasts are being slashed, and the big danger is deflation, not inflation.

The central bank has been reluctant to ease policy because the already weak yuan could come under even greater selling pressure, so investors are pinning their hopes on a fiscal boost from Beijing. And it will have to be a significant boost.

Measures announced on Friday to help boost sales of cars and electronics failed to impress investors, and foreigners are steering clear of China's financial assets even though they are relatively cheap.

But the economic, financial, political and social challenges Beijing faces are such that Chinese stocks can get even cheaper before foreign investors start buying again en masse.

[loganair] 23/7/2023 12:56

For several years I've been posting that China will continue to gently and slowly reduce their US Treasury holdings, however will not do much until they reduce them to between $700bln to $800bln before making their real move, what ever this move is going to be.

China continues to reduce its holdings of US Treasury's...


May - $846.7bln
Jan - $859.4bln

2022:

Nov - $870.0bln
Oct - $877.8bln
Sep - $933.6bln
Aug - $971.8bln

[loganair] 19/7/2023 09:04

The Chinese economy's sluggishness is even raising the prospect that China may be entering an era of much slower economic growth, and may never get rich.

Whether it chugs ahead at 3% to 4% annually or flirts with Japan-like "lost decades" of stagnation, it looks set to disappoint its leaders, its youth and much of the world.

More immediately, the whole gamut of U.S.-China tensions is back on investors' radar - climate, defense and security, and semiconductors and tech.

[loganair] 18/7/2023 08:07

China casts shadow over global markets:

Chinese stocks fell almost 1% on Monday, their biggest loss in three weeks and dragging the broader MSCI Asia ex-Japan index into the red for the first time in six sessions.

The shadow over local markets cast by China's second quarter GDP data on Monday is unlikely to lift completely by Tuesday, and the pressure on policymakers in Beijing to deliver more stimulus to shore up activity will surely increase.

Chinese GDP grew 0.8% in April-June from the previous quarter, beating the consensus forecast of 0.5%. But on a year-on-year basis, GDP expanded 6.3%, well below the 7.3% forecast.

JPMorgan, Morgan Stanley and Citigroup trimmed China's growth forecast for 2023 to as low as 5%, with Morgan Stanley also trimming its 2024 GDP forecast by 40 basis point to 4.5%.

[loganair] 17/7/2023 17:59

For info - The falling USD = the market is anticipating the following:

1. An end to the Fed hiking interest rates.
2. Recession in the United States.
3. Deflation in the United States.