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Thoughts

2/3 of China Focused Funds Lost More Than 20% in 2018

[This is a short note because its purpose is to flag an ongoing headache rather than dwell on causes, symptoms or possible cures. I may return to those in due course.] Avoidable Calamity The title of this note should have been the headline for the story that was run by the Financial Times on January […]

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Sunday Papers

The Sunday Paper – Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China

This beautiful map from the IMF Working Paper highlighted today, which shows the China-wide county by county cost of transportation infrastructure, is only tangentially relevant to the paper’s conclusion. The point it makes though is self evident. The ubiquity of transportation infrastructure, or lack of it, has a lot to do with the cost/ease of […]

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Sunday Papers

The Sunday Paper – Buffett’s Alpha

We all know how Wazza’s done it; at least many of us think we do. The paper summarized and linked to today though claims to be the first fully rigorous empirical analysis of Berkshire Hathaway’s results from October 1976 to March 2017 and the conclusions are, in fact, somewhat of a surprise. The paper was […]

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Sunday Papers

The Sunday Paper – China’s High Savings: Drivers, Prospects, and Policies

Two charts from an IMF Working Paper published last December sum up the problem. The first shows how high the rate remains The second shows just how little progress has been made in recent years in trying to reduce this. Personally I’ve never seen why individuals, or countries for that matter, should ever apologize for […]

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Sunday Papers

The Sunday Paper – The Long-Run Trend of Residential Investment in China

“Contrary to the conventional wisdom, our empirical analysis indicates that urbanization or speculative demand for housing played [only a] limited role in driving China’s residential investment boom.” That’s according to economists Ding Ding and Weichang Lian, the authors of the IMF Working Paper highlighted today. This is an important conclusion; because if the IMF who […]

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Thoughts

Why China Stocks Have Been Such Dogs. Why They’re Set To Remain So And How This Could Change

I’m not just referring to the last couple of years. In work published* in the Q4 edition of the Financial Analysts Journal you’ll find this observation “.., since 1997 the market with the fastest growing economy [China, out of 43 that made up the MSCI World Country Index] has posted one of the lowest stock […]

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Sunday Papers

The Sunday Paper – A Tragedy in the Making?: The Decline of Law and the Return of Power in International Trade Relations

Liberals don’t like to be reminded of the harsh truth at the beginning of this paper from Gregory Schaffer, Chancellor’s Professor at the University of California’s Irvine School of Law i.e. power is stronger than law. Surely the rule of law is a superior model to the rule of man? Well, to a non-liberal the […]

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Sunday Papers

The Sunday Paper – How Hawkish Is the Chinese Public? Another Look at ‘Rising Nationalism’ and Chinese Foreign Policy

The U.S., IMHO, has embarked on a multi-year policy of China containment. The present so-called trade dispute is only the most current of what will be a series of China ‘tail-pulling’ exercises ahead. Anything then that can shed light on how average men and women on the Chengdu omnibus feel their government should act when […]

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Sunday Papers

The Sunday Paper – China’s Economic Rise: History, Trends, Challenges, and Implications for the United States

Published in February this year the report highlighted today is from the non-partisan Congressional Research Service in the U.S. and is authored by Wayne M. Morrison, a Specialist in Asian Trade and Finance. It provides a scholarly-but-with-a-light-touch review of where China is today and how it got here and while close China watchers will find […]

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Sunday Papers

The Sunday Paper – China’s Rebalancing: Recent Progress, Prospects and Policies

Overall, the authors of a recent IMF Working Paper (November 12th 2018) reckon, China’s doing a good job on rebalancing and, by implication, management of the economy in general. Rui Mano and Jiayi Zhang point out that superficially disappointing progress in 2017 had more to do with external factors than domestic backsliding. They conclude, unsurprisingly, […]

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Sunday Papers

The Sunday Paper – Quo Vadis?: A Comparison of the Fintech Revolution in China and the West

‘Fintech’, to borrow a somewhat overused tech simile, is like teenage sex; everyone talks about it, nobody knows how to do it, everyone thinks everyone else is doing it and so claims they’re doing it too. The paper highlighted this week from Bonnie Buchanan and Cathy Cao of the Seattle University is hard to summarize […]

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Sunday Papers

The Sunday Paper – Information Dissemination Through Embedded Financial Analysts: Evidence from China

A question I sometimes ask when visiting a new company is ‘Whom, among the analyst community, do you think most reliably summarizes your prospects?’. This is of course a round-the-garden way of asking to whom do you drop the most timely and informed updates? The paper highlighted this week, from Zengquan Li and T. J. […]

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Sunday Papers

The Sunday Paper – The State As Controlling Shareholder in Chinese State-Owned Enterprises: The China Unicom’s Mixed-Ownership Reform and the Possibility for the Emergence of a ‘Consultative Corporate Governance’ Model

黑猫白猫, 能捉到老鼠就是好猫 (black cat, white cat; if it can catch rats, that’s a good cat). China has a long history of flying policy kites, especially in the area of financial reform, and it sent another up last year directed at SOEs using the weakest listed telecom provider China Unicom as its subject. Following an announcement […]

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Sunday Papers

The Sunday Paper – Temperature and High-Stakes Cognitive Performance: Evidence from the National College Entrance Examination in China

Years ago I was in a garment factory in southern China. I made a note as I was being shown around about how enlightened the factory owner was having air-conditioning installed to keep staff comfortable. Later in the formal Q+A I brought up the issue and asked how they justified the extra expense? If we […]

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Sunday Papers

The Sunday Paper – Labor Market Returns to Education and English Language Skills in the People’s Republic of China

China is a good place to study the return to education and social scientists have been at it for some time. Researchers M. Niaz Asadullah and Saixi Xiao, both affiliated with the University of Malaya but writing in a Working Paper for the IZA Institute of Labor Economics, count 68-such studies from 1987  to 2016. […]

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Thoughts

China Reset – New Challenges, Fresh Opportunities

China’s stock markets have progressed, in the last three years, not necessarily to investor’s advantage. A look at the performance of broad indices over the period is self explanatory: Shanghai Stock Exchange Composite Index -25% Shenzhen Stock Exchange Composite Index -36% Hang Seng China Enterprises Index -7% Summary Conclusion Presently, nothing good can be said […]

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Sunday Papers

The Sunday Paper – Long-Term Extreme Fasting Following a Traditional Chinese ‘Bigu’ Regimen: A Preliminary Retrospective and Prospective Cohort Study

The paper highlighted today claims to be the first formal medical assessment of the ‘Bigu’ fasting regime. Bigu fasting (more here if you care Bigu Fasting) has been practiced in China in one form or another for over 2,000 years. Today it’s promoted as a Taoist ritual and is usually carried out at retreats under […]

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Sunday Papers

The Sunday Paper – China’s Local Government Bond Market

First, a handy graphic from the note highlighted today. The Working Paper from the IMF raked over this morning sent me a long way down memory lane and, as this is my blog, you’ll have to allow the reminiscence. My first job was working as the assistant to the money manager of an insurance company […]

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Thoughts

Hong Kong IPOs – Good Times For Shovel-Vendors; Less So For Prospectors

The IPO process in Hong Kong, as I’ll explain in this note, has been a serial value-destroyer in the last couple of years and part, but by no means all, of the problem lies within the industry that greases its wheels. It is investors though that must shoulder the final responsibility for a system that […]

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Sunday Papers

The Sunday Paper – Sectoral Booms and Misallocation of Managerial Talent: Evidence from the Chinese Real Estate Boom

The paper highlighted today is dense and the mechanics employed to get to the conclusions probably beyond the keenest (well, me anyway) of mortals. The summary though is intuitive and valuable. Videlicet? China’s multi-year and now multi-decade property boom has come with costs to other parts of the economy. Previous studies, for example, have highlighted […]