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Sunday Papers

The Sunday Paper – A Tale of Transition: An Empirical Analysis of Economic Inequality in Urban China, 1986-2009

Forget debt, the next big issues that will dominate discussion about China’s future progress will be on how to fix the problem of income inequality and whether or not China can escape the middle-income-trap. The paper highlighted this week looks at the first issue and rather than suggest a fix aims merely to quantify the […]

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Sunday Papers

The Sunday Paper – Avoiding China’s Capital Market: Evidence from Hong Kong-Listed Red-Chips and P-Chips

If you wanted to foster a ‘quality’ stock market you’d pick only the best companies to list right? In China’s case this would mean the biggest, most profitable and best-connected politically. Researchers Weishi Jia and Grace Pownall from the Emory University in Atlanta and Jingran Zhao from the HK Polytechnic set out to see if […]

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Thoughts

China – Be Bullish. Odds Favor Participation

Preamble Facts, in plain sight, convinced me in September 2014 that China was heading for a hard landing; and, thereafter plus or minus, that’s pretty much what we got. [You can find that piece here Hard Landing]. China’s slowdown has been part product of a difficult global environment and part product of a policy to jump […]

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Sunday Papers

The Sunday Paper – Trump’s China Trade Policies: Threats and Constraints

Doctor Stuart Malawer, from the George Mason University is an academic; but the paper highlighted this week from him reads more like an op-ed and is clearly partisan. However, within the doctor’s passionate warning about how messy the reality of President Trump following up on trade related promises is going to be he makes some […]

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Sunday Papers

The Sunday Paper – The Effect of Mandated CSR Disclosure on the Pollution Levels of Publicly-Traded Chinese Firms

China is only one of four countries that require (some but not all) companies to produce CSR reports. The others, Denmark, Malaysia and South Africa are minnows by comparison. In 2012 China heaved aloft 8.1bn tons of greenhouse gasses, over 50% more than it’s closest rival in the pollution game the U.S. It’s estimated that […]

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Sunday Papers

The Sunday Paper – Do Share Issue Privatizations Really Improve Firm Performance in China?

Margaret Thatcher started the process; and, since her first government began the wholesale sell-down of state owned assets, the rest of the world has enthusiastically followed suit. In nearly all cases liberated state owned companies, and their stock prices, do either well or very well following privatization. China’s experience though has been different. China’s SOE […]

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Sunday Papers

The Sunday Paper – How Important are Earnings Announcements in China?

The dryness of the title of the paper highlighted this week almost caused me to overlook it; and that would have been a mistake. It’s a bombshell. It’s conclusion is a vindication of my current decision to avoid A-shares and a huge wake-up call to the increasingly large number of institutional investors now trying their […]

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Sunday Papers

The Sunday Paper – Ambivalence in Place Attachment: The Lived Experiences of Residents in Declining Neighbourhoods Facing Demolition in Shenyang, China

I plan to visit Shenyang, the capital of China’s rust-belt Liaoning province, in May. I’m going because I want to get a first-hand sense of how the switch from the production to the consumption economic model is affecting the losers. Liaoning, one of the only areas in China (partly due to a now exposed inflated […]

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Sunday Papers

The Sunday Paper – Infrastructure and Urbanization in the People’s Republic of China

“..there is no evidence of over-investment in infrastructure at the aggregate level. Nevertheless, there is strong evidence that the marginal return to infrastructure investment in the PRC has been rapidly declining.” This is according to Zhigang Li writing in an Asian Development Bank Institute Working Paper from January this year. Believe it or not there’s […]

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Thoughts

How Will Investors Ever Be Persuaded To Like Chinese Banks?

Preamble With the exception of a puff in 2014~15, mostly and quickly reversed, China’s stock markets have been dull places since the GFC. For a full-throated roaring bull market to ever reestablish itself investors, both domestic and foreign, are going to have to buy bank stocks as these dominate major indices. Without such a move […]

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Sunday Papers

The Sunday Paper – The Information Environment in China: Evidence from the Split Share Structure Reform

‘..a new era of transparency is emerging.’ [With regard to listed companies on China’s domestic A-share markets]. That’s according to Jing Chen, Elizabeth Dedman, Muhammad Yahya Ghazali and Ja Ryong Kim, all from the University of Notingham in the U.K. writing in the paper highlighted this week. The researchers set out to see if the […]

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Sunday Papers

The Sunday Paper – Hidden Risk: Detecting Fraud in Chinese Banks’ Non-Performing Loan Data

Let me start with my position on Chinese banking NPLs. I believe numbers produced by Chinese banks are too low. The true situation is larger than the numbers suggest; but this is widely understood. Are the numbers as high as some breathless analysis in recent years have suggested (Fitch 20%)? No. Can the problem be […]

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Sunday Papers

The Sunday Paper – Social Networks and Mental Health Problems: Evidence from Rural-to-Urban Migrants in China

Pity China’s migrant workers. As the paper highlighted this Sunday reminds they ‘.. constitute more than one third of the Chinese urban labour force, produce most of the goods exported from China to the rest of the world, and yet are institutionally discriminated against in the Chinese urban labour market. They work much longer hours, […]

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Sunday Papers

The Sunday Paper – Rebalancing in China—Progress and Prospects

China is at a crossroads; if it fumbles next steps a middle-income-trap awaits. The paper highlighted this week is another in the ‘Working Paper’ series from the IMF. This one, by Longmei Zhang from their Asia and Pacific Department, was released last September and highlights some of the pressing problems China now faces and, more […]

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Sunday Papers

The Sunday Paper – Resolving China’s Corporate Debt Problem

Here’s the problem, in a nutshell. The paper highlighted this week is from a team of 13 contributors and was released last October as an ‘IMF Working Paper’. It’s worth a close read for a couple of reasons. First, if you’re new to the subject it gives good perspective on how and why we’ve got […]

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Sunday Papers

The Sunday Paper – Chinese Imports: What’s Behind the Slowdown?

The report highlighted this week is an IMF Working Paper prepared by Joong Shik Kang and Wei Liao dated May 2016. At that time slowing Chinese imports were an especially hot topic for commodity and raw material exporters; but the paper still has relevance, and for all of us today. The researchers conclude weaker investment […]

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Sunday Papers

The Sunday Paper – Expected Investment Growth and the Cross Section of Stock Returns

Interested in learning about a strategy that, from July 1953 to December 2015 if implemented, would have generated an annual return of over 20% (with a Sharpe ratio of 1.01)? Jun Li from the University of Texas and Huijin Wang from the University of Delaware  decided to look at an old investment-theory chestnut, the effect […]

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Sunday Papers

The Sunday Paper – Skewness Preference and IPO Anomalies in China

Investors the world over know day-1 IPO returns are usually good. Nowhere in the world are they as good as China though. From 1990 to 2013 the average day-1 IPO return was 118.4%. In the paper highlighted this week Wei Tang and Liheng Xui from Fudan University and Tianhao Wu from Yale University looked at […]

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Sunday Papers

The Sunday Paper – Religion and Public Trust in Government in Contemporary China

According to the study in the paper highlighted this week those in China who profess some sort of religious belief are also more likely to be skeptical of the central administration. Geng Niu and Guochang Zhao of the South Western University of Finance and Economics together with Bosen Ding of Peking University drilled a 2010 […]

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Sunday Papers

The Sunday Paper – China’s Three-Fold Environmental Degradation

I started the paper highlighted this week thinking, hmm, more panda-hugging belly-aching from do-gooders who don’t understand the necessity of the trade off between development and, shall we call it politely, environmental impact? I finished though fully persuaded of the correctness of the authors final summary; ‘Without a fundamental mentality shift among top leaders, the […]