Author: Nial Gooding

Well, is there? The authors of the paper highlighted this week, Tianhao Zhi et al, from the Business School of the Sun Yat Sen University, start with trying to pin a definitive tail on the donkey in terms of defining what a ‘bubble’ is. They believe property markets can have two types of bubble. The […]

The math in this paper will be beyond most mortals; but the conclusion is straightforward if depressing. The authors, Huangnan Shen Jim from the School of Oriental and African Studies in London et al, wanted to re-visit the old chestnut of why China’s SOEs remain so powerful and so un-reformed. They believe the answer lies […]

Writing in the January-February edition of Foreign Affairs Oriana Skylar Mastro, assistant professor of security studies at Georgetown University, updates some old thinking about China’s perceived attitude to it’s fractious ‘ally’ N. Korea. There are three major misconceptions about Beijing’s position. First, China and North Korea are not ‘allies’ in any meaningful sense today. Second, […]

You need to be afraid of ETFs. They are, most likely, the soil in which the seeds of the next financial crisis (there’s always another one) are being planted. How do I know this? I don’t for sure; but they look very like other financial innovations that started out (and, in fairness, after convulsion came […]

Sometimes I come across a paper that in seeking to highlight one issue is helpful to me as an investor in inadvertently shedding light on another. The paper this week, from Donghui Wu and Qing Ye of the Chinese University (H.K.) and Sun Yat Sen University (Guangzhou) respectively is a good example. The researchers wanted […]

I object to Dual-Class Share Structure* (DCSS) companies as they violate the natural justice of the One Share One Vote (OSOV) principle. I believe they give management an extra mechanism to treat minorities unfairly and ultimately the share prices of companies with these structures will trade at a discount to peers with OSOV structures. These […]

There seems to be a consensus among academics, based on work done on the U.S. stock market, that investor sentiment is a good long-term forward reverse-indicator for stock markets. Which makes intuitive sense. Maximum-bullish is often a very good time to bring chips in; maximum bearish usually a good time to get them back on […]

Banks face three types of risk. The biggest is credit which accounts for the bulk of it, but there are also market and operational risks. When setting aside capital they must allocate for each. Because of it’s impact much work has been done on credit risk but, probably because banks are especially unwilling to share […]

Foreigners bring less patent infringement cases to Chinese courts than domestic plaintiffs because the deck is stacked against them. Chinese courts are biased in favor of protecting Chinese interests and even when foreigners get a judgement in their favor damages awarded are piffling. To make matters worse judgements are opaque leaving lawyers in the dark […]

There’s a view among some fund managers that corporate site visits are unnecessary. A good company, the argument runs, should be providing via it’s regular reporting sufficient information on its operations to allow investors to make informed decisions about their prospects. Perhaps this is the case in developed markets where a mature culture of corporate […]

Using data from the Shenzhen and Shanghai stock markets Chun-Da Chen, Chiao-Ming Chen and Riza Demirer from the Lamar University (Texas), ZhiDao Financial Services and the Southern Illinois University respectively set out to test if oil price volatility had any predictive power for stocks when combined with a simple momentum strategy? They finger momentum as […]

Academics writing about curbs to academic freedom are likely to have a bias. However, the paper highlighted this week from Carole J. Peterson of the University of Hawaii and Alvin Y. H. Cheung from the NYU is reasonably balanced. They detail the way in which academic freedom has been compromised in Hong Kong since the […]

The paper highlighted last week showed the relationship between stock price crash risk and a long delayed audit. To remind, the principal reason for stock price crashes is managers hoarding bad information which, ultimately, comes out all at once. The authors of the paper highlighted today, Hua Feng from the Xi’an Jiaotong University et al, […]

Academic research has been closing in on why stock prices go up in small increments over a long period but ‘crash’ more violently over much shorter periods. The  reason seems to be a combination of asymmetric management reporting and the fact that all investors can buy good news but few can sell short. Company managers […]

Apologies, this paper is too long and a lot of the conclusions have the whiff of biased conjecture; but there’s some good stuff among the often circular-referencing social ‘science’. The authors, Kristin Shi-Kupfer, Mareike Ohlberg, Simon Lang and Bertram Lang all from the Mercator Institute for China Studies in Berlin, have tried to take China’s […]

Censorship in China is normally associated with political issues; but Jonathan Hassid, an Assistant Professor at the Iowa State University, has taken a look at censorship from an economic perspective. In the process he takes the lid off a major contributory factor to domestic Chinese investors’ antipathy to the A-share stock markets. The high degree […]

Perhaps, with the National Congress still in full flow, this isn’t the most appropriate time to look at the dark underbelly of the Magic Kingdom? Let’s do it anyway. In the paper highlighted this week from Dimitar D. Gueorguiev, Assistant Prof. of Political Science, Syracuse Univ., Maxwell School of Citizenship and Public Affairs, he uses China […]

In the 1960’s students in Hong Kong were concerned about local Chinese being given a fair shake by an aloof colonial administration. This generation are now the ‘Uncles of Victoria Park’ that go there to shout down the new generation of young malcontents who want to be recognized as Hongkongers first and foremost. [How times […]