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Sunday Papers

The Sunday Paper – An Inquiry into the North-South Management Gap in China

Always nice when academics supply proof for prior suspicion. In this case the ‘superiority’ of Southern China based firms versus Northern China peers. As a rough guide I’ve always drawn a line along the Yangtze to demarcate North from South in China. The researchers in the paper highlighted today have taken their line from the […]

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Sunday Papers

The Sunday Paper – Does Agricultural Endowment Impede Structural Transformation?—An Empirical Examination

Classic economic theory posits that being richly endowed with good quality arable land will retard an economy’s transformation to higher value added industrial activity. Just as diamonds, gold and oil have cursed economies some have suggested agricultural land might be as much of a problem. Until the paper highlighted this week however nobody had conclusively […]

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Sunday Papers

The Sunday Paper – ESG Rating Results and Corporate Total Factor Productivity

This paper may quickly become an historical artifact. It’s input, Environmental Social and Governance (ESG) ratings, and it’s output, algorithmic derivations of results using machine learning are analytical tools changing at such a pace as to condemn almost all research using them to obsolescence upon publication. Moreover I, and many other investors, have spotted a […]

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Sunday Papers

The Sunday Paper – To What Extent Can Urbanisation Mitigate the Negative Impact of Population Ageing in China?

Writing in a working paper for the Brussels based think tank Bruegel, Alicia Garcia-Herrero and Jianwei Xu contribute usefully to the question of what effect China’s ageing population may have on productivity? The short answer is ‘not much’, at least until 2035. Even after that the ageing population isn’t a guaranteed productivity retardant. As a […]

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Sunday Papers

The Sunday Paper – Does Digital Transformation Increase Bank Profitefficiency? Evidence from China

A brief personal preamble. I maintain Chinese banks are among the best run and safest financial enterprises in the world. This view is incontrovertible in only one circumstance i.e. you believe they falsify their numbers. The fact many do* explains the multi-year drubbing valuations have suffered. [*Believe banks falsify numbers not that banks do, in […]

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Sunday Papers

The Sunday Paper – The IMF’s Annual China Assessment Together With 2024-and-Beyond Prospects

On balance, the IMF give China a clean bill of health in their latest annual assessment. What they’ve chosen to particularly focus on in this report is the ongoing mess in the property market and the concomitant rise in debt at the local government level. This focus is in line with what we believe China […]

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Sunday Papers

The Sunday Paper – No Trade, No Killing — An Evaluation of China’s Ivory Ban on Elephant Poaching

A debate in public and academic circles has yet to be settled on the issue of whether banning certain products is effective. America famously banned alcohol a while ago with very mixed results, and reversed the decision not too long after. Today, the argument continues as we vex about whether, or not, we should permit […]

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Sunday Papers

The Sunday Paper – Financial Globalization: Moving Towards a Polarized System?

Françoise Huang (et al.), Senior Economist for Asia Pacific and Trade writing in an Allianz Research paper revisits the notion that the Chinese Renminbi (Rmb) may be heading to a position of ‘co-hegemony’ with the U.S. Dollar (U$). The brief begins by noting since 2009 the influence of the Rmb has doubled in size in […]

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Sunday Papers

The Sunday Paper – The Recent Slump in South Korea’s Exports to China: Analysis of Causes and Implications

Whilst the proportion of goods imported by Korea from China has been steady the proportion of goods imported by China from Korea has been falling. This development is highlighted in a short brief from Jung Min Han and Jeong-Hyun Kim writing for the Korea Institute for Industrial Economics and Trade. They note Korea’s proportion of […]

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Sunday Papers

The Sunday Paper – The Impacts of Population Aging on Urban House Prices: Evidence from Chinese Real Estate Market

Bad news for those hoping for a broad recovery soon in China’s residential property market. Xiguang Cao (et al.) from the East China University of Political Science and Law has looked at 287 Chinese cities from 2005-2018 to see if aging populations correlate with lower house prices; and they do. Studies from the mature markets […]

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Thoughts

Alcoholics Complain Health Issues Curtailing Future Binging

[As the last W-share listed behemoth to flirt with its listing price flails (Meituan 03690, September 2018, H$69.00, others are well through) brief thoughts on the process of listing companies that once touted poor corporate governance i.e. Weighted Voting Rights, as a virtue. It wasn’t then, it isn’t now.] The decision taken by the Hong […]

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Sunday Papers

The Sunday Paper – The Futility of Hostile Takeovers in China

Chun Zhou and Samantha Tang from the Zhejiang University and the National University of Singapore note past flurries of excitement about the possibility of hostile takeovers becoming a business in China. However, in the paper highlighted today they push back on the notion this is an inevitable development and conclude instead “it is the futility […]

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Sunday Papers

The Sunday Paper – Retail and Institutional Investor Trading Behaviors: Evidence from China

That China’s domestic stock markets (that increasingly set the tone in Hong Kong) differ fundamentally in terms of players and tactics from developed markets is not new news. However, Lin Tan (et al.), from the Tsinghua University has produced a meta-study looking not only at how the players differ but also how their tendencies manifest […]

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Thoughts

Self-Evident Truths – The Ongoing Case For China Investment

Two economies dominate consideration of economic prospects in the next decade. Look around today. Almost every modern convenience was conceived of or perfected in the United States, and almost every device facilitating this convenience was made in China; and this reality of daily life, for most on the planet, is unlikely to change soon. In […]

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Sunday Papers

The Sunday Paper – Reset, Prevent, Build: A review of the Report from the U.S. bipartisan Congressional Committee on China-U.S. strategic competition

The Document referenced in the title was produced by The Select Committee on the Strategic Competition Between the United States and The Chinese Communist Party (hereafter, The Committee) the week before last, to small fanfare. [The Committee have their own website and the Document can be accessed there via this link Reset-Prevent-Build] On reading through […]

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Sunday Papers

The Sunday Paper – Do State Enterprises Manage Earnings More than Privately Owned Firms? The Case of China

More than half of my money invested in China is in the stocks of either State Owned Enterprises (SOEs) or quasi-SOEs. Their earnings are more reliable, the managers are more transparent, the operations tend to be more stable and they’re mostly better financed than private sector peers. Observable facts I’d strongly argue, not just my […]

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Sunday Papers

The Sunday Paper – Despite disruptions, US-China trade is likely to grow

U.S.-China trade in 2022, at U$730bn, was a new all-time record. Megan Hogan and Gary Clyde Hufbauer, both at the Peterson Institute for International Economics, look at changes in the pattern of trade between China and the U.S. since 2019 and find little changed over the period. Aggregate tariffs rose from 3.1% to 19.3%, China […]

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Sunday Papers

The Sunday Paper – Site Visits and Corporate Investment Efficiency

There’s no doubt, and there’s ample academic literature to support the notion, that a regular dialogue with investee companies is a good thing for analysts and managers. Analysts make better forecasts and managers make smarter investment decisions as a result. Through COVID site visits were difficult and we had to rely on conference calls to […]

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Sunday Papers

The Sunday Paper – Never Meet Your Heroes: Community Policing in Contemporary China

I have a couple of issues with the paper highlighted today. Viola Rothschild at the Duke University, Department of Political Science and her collaborator Hong Shen Zhu at the University of Pennsylvania, Center for Study of Contemporary China lead off by describing China as an ‘autocracy‘, which it isn’t, exactly. Second, they go on to […]

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Thoughts

Acres of Diamonds* – Hong Kong Listed China Stocks

[The title of this note is a reference to a speech* given by Russell Conwell, founder of Temple University, over six thousand times before his death in 1925. The speech encouraged Philadelphians not to dream of distant riches but find them, via observation and enterprise, in their own backyard. If you substitute ‘Hong Kong’ for […]