Jpmorgan China Growth & ... Share Discussion Threads

[tonytyke2] 25/10/2022 10:42

dennisbergkamp, Now at 3 year lows and more than 46% down year to date, the share price was over £8 last year.I bought in at around 18% discount to NAV yesterday, after the rout on key shares over there. It pays a dividend and I am now buying for the longer term, so happy to sit and add where I think appropriate. IMO seemed a decent risk/reward scenario here particularly if anything eases/relaxes on lockdowns. Good luck!

[loganair] 25/10/2022 09:53

It seems to me reasonable to say there is still further to go on the down side.

[dennisbergkamp] 25/10/2022 09:52

This looks super cheap at this level. Any thoughts? Is it down to more lockdown chaos?

D

[loganair] 18/9/2022 11:38

In my book it's not the Quantity of GDP that matters so much, it's the Quality of GDP that matters.

The strongest economy doesn't necessarily mean the economy with the highest GDP.

Which country has the best Quality of GDP?

Which country has the strongest Economy?

Most of China's rapid growth in GDP is merely cosmetic as in truth, the fast growth of GDP in recent years mainly depended on the fast development of the real estate sector, whereas the fast development of the real estate sector became a money-making machine for a few people. Therefore, housing prices rose and GDP increased, but the real estate bubble grew which has lead to increasing social problems.

As far as real estate is concerned, if promoting the housing market is beneficial to the public, then this must be a good thing. However, the fast expansion of the housing market became the tool with which to elevate capital prices, and subsequently a few people plundered the wealth of the majority.

The central government should not sacrifice long-term economic development for short-term GDP growth. So the top priority is still to squeeze the real estate bubble firmly rather than rekindling the fire of the real estate sector to ensure economic growth.

[loganair] 17/9/2022 10:47

Is the Chinese economy about to turn a corner? - by Graham Smith:


MUCH of the world remains focused on the cost-of-living crisis and rising interest rates. China stands out as something different, as its economy is out of step with the West in some important ways that may add to its appeal as a diversification opportunity. Undoubtedly, China has its own set of challenges, but there are growing signs the foundations are now being laid for improving economic conditions as we enter the latter stages of this year. Is now the time to look at China?

A stable start to the month is just what investors in China needed and, so far, so good. The year to date has been something of a rollercoaster for investors in China, as Covid lockdowns, supply chain issues and tougher lending conditions in the property sector have weighed on economic growth.

The government’s official aim is to see China’s economy grow by 5.5% this year, significantly below the 8% achieved in 2021. However, there are doubts now that this level of growth can be achieved, with some analysts pencilling in growth of between 3% and 4%. In the three months to June, the economy grew by just 0.4%, as activity slumped in the face of strict Covid restrictions.

While domestic spending is the prime driver of China’s economy these days, the slowdown we are now seeing comes at a time when world demand is also coming under pressure.

A still rising share of a potentially shrinking (albeit very large) market may well be the reality that lies ahead. China’s latest trade data is consistent with this outlook, with exports rising at an annual rate of 14% in August in local currency terms, but falling 5.3% on the month on the same basis.

The technology sector has also been a source of concern, after the implementation of new regulations governing how companies are allowed to operate. Such interventions appear to have been on the wane lately, suggesting the focus is now turning elsewhere.

For evidence of that, we need look no further than the two cuts to a key lending rate we saw in China in August, apparently aimed at bolstering support for property developers and homeowners.

This week we saw China’s major lenders reduce their deposit rates across the board, a move that should allow them to lower lending rates and extend their loans to businesses.

While we have yet to see an economic stimulus package of any great scale, the focus has undoubtedly been moving in that direction. The latest signs of that came a week ago from Chinese officials indicating they aim to increase the stimulus being applied to the economy this quarter.

Previously, in August, the government announced various measures mainly focused on increasing investment into infrastructure in order to boost economic activity and growth.

So that raises an important point for global investors. While much of the world wrestles with conditions of slowing economic growth coupled with rising interest rates and sky-high inflation, could China be about to move in a completely different direction?

It certainly has the capacity to. China’s annual inflation rate was 2.5% in August, down slightly from 2.7% the month before. Excluding food and energy, inflation was just 0.8%, the same as in July.

These latest readings are a far cry from the rates we are now seeing in Europe and North America.

In stark contrast to the West, interest rates have been edging lower in China and there could be other moves in the same direction, including a further reduction in the amount banks have to keep in reserve.

The bottom line is that the divergence in central bank and government policies we have seen already between China and much of the rest of the world looks set to continue as we move through the remainder of this year. That ought to be good for China’s economy and stock market.

But what about corporate earnings? In the West, we’ve seen the rate at which companies are growing their profits decrease this year. In the US, corporate earnings are expected to rise by only a fraction of the amount they grew last year.

With a tailwind of looser fiscal and monetary policies, the earnings outlook for Chinese companies would likely improve. While the jury’s still out on that, looser monetary and fiscal conditions should help and at a time when supply chains are also returning closer to normal.

As it stands China’s stock market looks inexpensive compared with history and when you compare it to world markets.

At the end of last month, the MSCI China Index was trading at just 11 times the earnings companies are expected to achieve in the year ahead, compared with 15 times for world markets and 17 times for the MSCI North America Index.

That suggests a fair bit of the bad news is already factored into prices, leaving room for a rebound should China successfully apply its stimulus and accelerate growth.

Moreover, the fundamentals for investing in China in the first place are all still there, in particular, a growing middle class driving a structural shift towards a more consumption driven economy.

China is also adapting fast to the technologies of tomorrow. For example, having traditionally relied on offshoots of western manufacturers to supply its domestic market, the country has grabbed the opportunity of the transition to electric vehicles (EVs) with both hands.

With control of large parts of the supply chains for EVs, it has become a new global world leader. According to the International Council on Clean Transportation, EVs and hybrids accounted for nearly a quarter of all domestic new car registrations in the first half of this year7.

Another area where great strides have been taken is in renewable technologies, particularly in the areas of wind and solar energy. China is already the world’s largest producer of solar energy and it currently dominates key parts of the solar supply chain too.

From a capital markets perspective, China still lags in the sense many of its industries are fragmented. That leaves plenty of scope for companies to merge or conduct other forms of deals to improve their efficiency and profitability.

There undoubtedly remain hurdles to the government forging a successful path. However, that’s the same as in any country in which you care to invest. The long term opportunities offered by China are still in place and they’re accessible at lower prices than they’ve been for some time.

[loganair] 01/9/2022 11:33

MoneyWeek - In his latest, War and Industrial Policy, Pozsar, argues that there were three forces that shaped the western economy before Covid - cheap immigrant labour, cheap Chinese goods and cheap gas - which is no longer the case.


“The “cartoon”; version goes like this: China got very rich making cheap stuff, and then wanted to build 5G networks globally and make cutting-edge chips with cutting-edge lithography machines, but the US said “no way”. As a result, Chimerica is going through a messy divorce. The two sides don’t talk anymore.”

Meanwhile, “Russia got very rich selling cheap gas to Europe, and Germany got very rich selling expensive stuff produced with cheap gas.” Those two sides aren’t talking any more either.

And now, in the divorce, it seems Russia and China are “getting it on”. Meanwhile, out west, QE and zero interest rate policies are no longer possible in a world without cheap Chinese and Russian exports.

[loganair] 15/8/2022 17:15

The Chinese people and companies are not wishing to borrow at the moment and therefore the Chinese government is trying to entice borrowing.

Considering the current financial system is debt based, unless debt keeps increasing, in other words if debt remains static or falls, the whole system collapses.

[petewy] 15/8/2022 16:46

Is this good or bad news/// Conclusion?

[loganair] 15/8/2022 09:19

China unexpectedly cuts 2 key rates, withdraws cash from banking system:


China's central bank unexpectedly cut a key interest rate for the second time this year and withdrew some cash from the banking system on Monday, to try to revive credit demand to support the COVID-hit economy.

Economists and analysts said they believe Chinese authorities are keen to support the sluggish economy by allowing a widening policy divergence with other major economies that are raising interest rates aggressively.

The People's Bank of China (PBOC) said it was lowering the rate on 400 billion yuan ($59.33 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points (bps) to 2.75%, from 2.85%.

"The rate cut surprises us," said Xing Zhaopeng, senior China strategist at ANZ.

"It should be a response to the weak credit data on Friday. The government remains cautious about growth and will not let go."

New bank lending in China tumbled more than expected in July while broad credit growth slowed, as fresh COVID flare-ups, worries about jobs and a deepening property crisis made companies and consumers wary of taking on more debt.

The PBOC attributed its move to "keep banking system liquidity reasonably ample". And with 600 billion yuan worth of MLF loans maturing, the operation resulted a net 200 billion yuan of fund withdrawal.

Market participants have largely priced in the partial rollover as the banking system was already flush with cash, with interbank money rates hovering at two-year lows and persistently below policy rates.

"Now with hindsight, today's 10-bp cut may be seen as 'front-loading' before the policy room gets narrower going forward as the PBOC sees structural inflation pressure," said Frances Cheung, rates strategist at OCBC Bank.

The PBOC reiterated it would step up the implementation of its prudent monetary policy and keep liquidity reasonably ample, while closely monitoring domestic and external inflation changes, it said in its second-quarter monetary policy report.

"Despite the warning of inflation risk and flush liquidity condition, the dominating downside risks under the COVID spread and property-sector rout prompted the PBOC to cut rates to stimulate demand," said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

China's 10-year treasury futures jumped more than 0.7% in early trade following the rate decision, while yields on sovereign bond for the same tenor fell about 5 basis points.

The central bank also injected 2 billion yuan through seven-day reverse repos while cutting the borrowing cost by the same margin of 10 bps to 2.0% from 2.1%, according to an online statement.

[loganair] 03/8/2022 09:18

China now considers U.S. Treasuries as a 'Risk Asset.'

It seems to me reasonable to say that China will not do too much at the moment to antagonise the situation with the West until it has let a couple of hundred billion USD mature and roll off its reserves, bringing them down to $800 billion or slightly less.

[loganair] 20/7/2022 11:15

Over the past couple of years, I've read several reports coming out of China that the Chinese Central Bank would like to reduce their portfolio of United States government debt to $800 billion.

As a percentage of Chinese GDP the amount of U.S. government debt they hold has fallen from circa 20% in 2010 to 6.7% today and will continue to fall.

[loganair] 19/7/2022 14:47

China’s portfolio of United States government debt in May dropped to $980.8 billion, according to Treasury Department data released Monday. That’s a decline of nearly $100 billion, or 9%, from the year-earlier month and is likely to continue.

It marked the first time since May 2010 that China’s holdings fell below the $1 trillion mark in what analysts call a move to prevent potential adverse impact from escalating China-US tensions.

The decline in China’s share has been attributed to Beijing working to diversify its foreign debt portfolio.

Xi Junyang, a professor at the Shanghai University of Finance and Economics said "There are political risks that the US dollar may be weaponized if the Biden administration continues the confrontational approach of his predecessor Donald Trump amid the strained China-US relationship. Given the volatilities on the market, excessive holding of US debt may pose financial security risks."

[loganair] 04/7/2022 09:14

Could the USA put sanctions on China? Yes it could, however will most probably damage the U.S. more.

One example, China buys 1/3rd of all Boeing aircraft being made, so any sanctions put on them China could easily immediately cancel their Boeing orders.

Petro China is now looking to dispose of their assets in the USA, Canada, UK and Australia and China Offshore Oil Corp are also looking to do the same.

[loganair] 28/6/2022 09:36

Often when any good investment significantly falls, the big boys say is un-investible as they want to make sure they are the only ones investing on the ground floor and the private retail investor comes back in once the share price has risen.

[velvetide] 28/6/2022 09:30

Kept hearing shouts that China was un-investable when this was c£3 just several weeks ago

[dennisbergkamp] 17/6/2022 08:44

How do you guys feel it’s currently been affected by lockdowns in China?

D

[petewy] 24/5/2022 17:05

Half year Results? Any views?

[melloteam] 22/5/2022 18:06

Mello2022, the popular three-day Investor event takes place on 24TH-26TH MAY at the Clayton Hotel & Conference Centre, Chiswick, W4. The breakdown of the three days is as follows:

Tuesday 24th May, 9am - 6pm - Mello Investment Trusts and Funds (WE ARE GIVING AWAY 20 FREE TICKETS TO THE TRUST AND FUNDS EVENT - THE FREE CODE IS FIRST20TF)

Wednesday 25th & Thursday 26th May, 9am - 6pm - Smaller Growth and Mid-Cap Companies (Tickets for 1 day are £115 and tickets for 2 days are £189. To get 50% off, use code MMTADVFN50).

There will be a variety of Trusts and Funds attending. There will also be educational sessions and keynote speakers such as Lord John Lee, Andy Brough, Rosemary Banyard, Clarke Carlisle and Gervais Williams.

For more information, please visit the event webpage:

[luckymouse] 20/5/2022 15:36

base b/o ?

[loganair] 22/3/2022 09:36

The US is imposing visa restrictions on Chinese officials in order to punish Beijing for alleged repression, intimidation and harassment of human rights activists and dissidents, both in China and around the world, the State Department said on Monday. As examples, Secretary of State Antony Blinken cited “genocide̶1; of Uighurs and repression in Tibet and Hong Kong.

The announcement comes after Friday’s call between US President Joe Biden and his Chinese counterpart Xi Jinping, in which Washington threatened China with “consequences” unless it disavowed Russia and joined the US-led embargo against Moscow.

China is a sovereign country opposed to unilateral sanctions and reserves the right to defend its interests accordingly, the government in Beijing said in response. Xi told Biden that China stands for peace and against war and backed a diplomatic solution of the Ukraine conflict.

[thruxie] 16/3/2022 22:28

BABA and TCEHY up 36% and 33% today. See post 126 BOOM!

[loganair] 15/3/2022 17:11

Saudi Arabia is currently in talks with China to price some of the oil sales in Yuan instead of Dollars. This comes on the back of the sanctions on Russia after the Ukrainian invasion, and the global realization that diversification away from the dollar might be wise. As more and more small events like this happen, the global trend towards de-dollarization gets stronger - another straw on the camels back of de-dollarization.