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Sunday Papers

The Sunday Paper – The Great Housing Boom of China

Willie Sutton, a notorious bank robber, is supposed to have said* he robbed banks because ‘that’s where the money is’. Investors in China might respond with something similar if asked why they’ve bought property? With an annual growth rate of 17% in home prices in the same period when the economy grew by 10% per […]

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Sunday Papers

The Sunday Paper – Does Short-Selling Amplify Price Declines or Align Stocks with Their Fundamental Values?

China isn’t the only place beastly short sellers are identified as a problem in poor markets. In recent years governments all over the world have intervened from time to time to suspend the work of these agents; but does this assist or retard price discovery? The authors of the paper (from 2013) highlighted this week, […]

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Sunday Papers

The Sunday Paper – Housing Prices In Urban China As Determined By Demand And Supply

Is there presently a bubble in the urban residential property market in China? It’d be hard to argue as prices have hardly moved in the last couple of years and are only now showing signs of modest growth. Have there been bubbles in the past though? Wasn’t the China property market ‘Dubai times 1,000!’ not […]

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Sunday Papers

The Sunday Paper – Dividend premium: Are dividend-paying stocks worth more?

Yes, yes and a hundred more times YES! It’s said that scientific theory advances one death at a time and something similar could be said about finance. I’ve ranted before about how wrong the Capital Asset Pricing Model is [CAPM – The Cost of Constraints] and the paper I’m highlighting this week is another brick in […]

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Sunday Papers

The Sunday Paper – Entrusted Loans: A Close Look at China’s Shadow Banking System

‘Shadow’ banking; sounds spooky right? Wasn’t it at the heart of the Global Financial Crisis? All those off balance sheet products that came home to roost at the same time and then, BOOM! All true, but the term ‘shadow banking’ when applied to China is really a misnomer as the vast majority of off-balance-sheet deals […]

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Thoughts

Hard Landing to Bumpy Bottom

Almost exactly a year ago I wrote about the hard landing then taking place in China [China Hard Landing. September 2014]. It’s been therefore interesting to see variations of this same analysis presented in recent months as new or unexpected when, in fact, its neither. If we knew a year ago that China was hard […]

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Sunday Papers

The Sunday Paper – The drivers of the Great Bull Stock Market of 2015 in China: Evidence and Policy Implications

From May 2014 to June 2015 China’s stock markets experienced strong upward momentum; but something unusual was going on compared to previous China bull markets. Leverage was in the mix as never before. In fact, in the paper I’m highlighting this week from Mr. Guoxiang Song from the Department of Accounting and Finance at the […]

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Sunday Papers

The Sunday Paper – The 2015 U.S.-China Strategic and Economic Dialogue in Review

Yawn-tastic? That depends; Presidents Obama and Xi will meet next month and if you care to get an early peek at the agenda, and the likely outcomes it’s all here. U.S.- China Strategic and Economic Dialogue The link above will take you to the full summary from Mr. Malcolm R. Lee, Nonresident Senior Fellow in the […]

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Sunday Papers

The Sunday Paper – The Superiority of Economists

Why do economists have such a high opinion of themselves (they do)? Why does society turn to them for answers to issues that other branches of social science may be in a better position to address (it does)? The answer is simple; math and money. In this paper it’s authors, Marion Fourcade, Professor of Sociology, University […]

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Sunday Papers

The Sunday Paper – The Cost of Constraints: Risk Management, Agency Theory and Asset Prices

That the multi-trillion dollar global institutional asset management business is built on various forms of the same incorrect theory is not something the industry likes to spend too much time thinking, or Heaven forbid, talking about; and it certainly has no interest in socializing this issue with its clients. I’m referring specifically to the Capital […]

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Sunday Papers

The Sunday Paper – China’s Growth: Can Goldilocks Outgrow Bears?

More so than in recent years the debate about whether China can avoid the middle-income trap has recently assumed a high religious quality. Heretics point to an unsustainable growth model that isn’t being moved away from fast enough to allow China to shift down gears to a more orderly and sustained model. Believers respond that […]

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Thoughts

Here We Are Again

In the last couple of months the Chinese stock markets reminded me of an old joke. A sinner is sent to Hell and told to choose eternity behind one of three doors. She asks to have a look first before deciding. Sure says the Devil and shows her the first option. In the first room […]

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Sunday Papers

The Sunday Paper – Understanding Residential Real Estate in China

When Mr. Jim Chanos described the China property market as ‘Dubai times 1000’ in 2010 he got a lot of attention; never let facts get in the way of a good trade. He has been proved not just wrong, but spectacularly so. Here we are in 2015, over five years on, and listed developers in aggregate […]

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Sunday Papers

The Sunday Paper – Why Can’t We Be Friends? Assessing the Operational Value of Engaging PLA Leadership

Why Can’t We Be Friends? The link above will take you to a paper from the National Bureau of Asian Research (Seattle, Washington) written by Mr. James P. Nolan, a US Air Force officer assigned to U.S. Pacific Air Forces (who recently completed an MA at Georgetown University). It’s a depressing read as it highlights, […]

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Thoughts

China’s Stock Markets – A Little Perspective

China’s stock markets have been noisy places of late. Take a step back though and nothing that remarkable, in the context of what markets are regularly observed to do elsewhere, has taken place. I believe schadenfreude on the part of the doubters, the majority of international investors, accounts for much of the amplification of what […]

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Sunday Papers

The Sunday Paper – Stature, Obesity, and Portfolio Choice

Stature, Obesity, and Portfolio Choice The link above will take you to a paper by George Korniotis and Alok Kumar, from the University of Miami, where they extend work on how physical appearance affects how many of us live our lives. John Adams (1.7m) joked that George Washington (1.88m) was sure to become the first […]

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Sunday Papers

The Sunday Paper – Skyscraper Height and the Business Cycle: Separating Myth from Reality

Skyscraper Height and the Business Cycle It seems obvious there should be some relationship between the health of an economy and the willingness and ability of developers to create ever taller buildings. Moreover, since tall buildings are often not economically sound propositions a large part of the decision to construct them must rest on hubris […]

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Sunday Papers

The Sunday Paper – Propaganda as Signalling

I’m part way through a disturbing new book that’s causing fresh chatter in the China nerdosphere and beyond [I’ve also seen a number of favorable reviews, the latest in the Weekend FT]. The book is ‘The China Model: Political Meritocracy and the Limits of Democracy’ by Mr. Daniel A. Bell, Chair Professor of the Schwarzman […]

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Sunday Papers

The Sunday Paper – China 60: From Fast Growth to Smart Growth

From Fast to Smart Growth The link above will take you to a fact-packed 64-pager from JLL that dives deeply into the current  state of affairs in and prospects for the major property investment sectors in China. They turn over each of the retail, logistics, office and hotel markets and, notwithstanding their obviously partisan position, […]

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Thoughts

China Stocks – Is That It?

Preamble I wrote earlier in the year I didn’t believe China stocks had entered a bull-market; and that’s still my view. To be clear what I meant then, and now, is China stocks have yet to capture the interest of a sufficiently broad group of investors to allow for the kind of self-sustaining momentum that […]