Category: Thoughts

Summary Conclusion China’s financial market’s problems are home grown. As such weakness caused in other markets, especially China shares listed in Hong Kong, is unjustified. China will take time to fix broken systems; but that shouldn’t blind investors to the opportunities fumbling is producing. Preamble Complete understanding, of any market, isn’t possible; the knowledge would […]

[I took a new-ish book for company on this visit; Ghost Cities of China by Mr. Wade Shepard and it’s the best, most informed and sensible work that I’ve seen on this issue. It’s an easy read and if you care about the subject I commend it to you highly. More at http://www.amazon.com/Ghost-Cities-China-Populated-Arguments/dp/178360218X] Introduction I […]

There’s no reason why views of the future need be timed to coincide with either the moon’s rotation about the earth or the earth’s rotation about the sun. Nonetheless, fund managers write monthly letters and seers in general think loudest about the future around this time of year. Having noted the above, and because it’s […]

Over the weekend of July 4th and 5th this year the Chinese government panicked. A raft of measures were announced to try and halt the slide in the domestic stock markets and in the following week over half of the stocks traded in the Shenzhen and Shanghai markets were suspended. The Shanghai stock market, at […]

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 […]

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 […]

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 […]

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 […]

[I was in Chengdu and Chongqing last week looking at property with Ms. Nicolle Wong of CLSA and her China property team as my guide.] A look at a regular map of China makes you wonder why Chengdu and Chongqing are described as being in the West? To the casual observer they look sort of […]

[I’ve just spent the last week as a guest of CLSA at their China Forum. First in Chengdu then on the road in Chengdu and Chongqing specifically taking the pulse of the local property market. Especial thanks to Ms.Nicolle Wong and her team for the property leg.] No other place on earth has so many […]

Preamble A few years ago there was a craze for ‘do-it-with’ jokes. Only the very naive would have failed to recognize do-it as a none too subtle euphemism for, well, doing it. This produced some quite amusing one liners. Organization theorists do it loosely coupled, for example; and some really sad ones. Monte Carloists do […]

The reality of events in China in the first quarter was that not much happened. The results season was a ‘meh’, underlying trends in the broad economy remained mixed and the anti-corruption campaign continued to affect decision making contributing to the new normal pace (slower) of economic development. So what’s with these fizzy stock markets? […]

Preamble A few years ago in China’s stock markets the retail/consumer sector was the hottest. Rising incomes, a huge population, what could go wrong? For investors in the space the bet has proved a poor or disastrous one depending on where it was placed. That such a sure-thing should have turned out so badly should […]

Preamble The last time (and I’ve sworn to never do it again) I was foolish enough to call the market was October 2010. At that time I confidently wrote we were most definitely and without a doubt entering a grand bull market. What a putz! That call was followed by the annus horribilis of 2011. […]

Preamble Nobody knows what determines the overall level of stock markets in the short term; and the short term can sometimes end up being several years. We know though that in the long term underlying earnings trends of the companies that compose an index must, ultimately, be reflected. It should come as no surprise then […]

Summary conclusion Eight weeks ago I wrote the Umbrella Movement would fold with only timing moot. I was wrong footed on how long it’s taken but at last, and inevitably, it’s happening. In this note I want to look at the reasons for the failure and then, perhaps more usefully, try and think over some […]

Preamble From, what we recognized then, an unsustainably high valuation level of over 30x earnings in October 2007 China stocks have been in a multi-year valuation bear-market. Following the recovery from immediate post GFC lows valuations made a lower high in July 2009 of around 20x before heading down again. In August 2011 they dropped […]

Summary conclusion The outlook for the US economy is the outlook for the global economy. It’s therefore, in large part, the outlook for China’s. Given the recent sturm und drang commentary from the US I thought a quick look at underlying reality was in order. What I found was not only reassuring but suggests, to […]

Summary Conclusion At the beginning of this week I wrote to friends I was scared. Irresistible forces seemed headed for immovable objects and it wasn’t clear how the mob, then reeling from clashes with tear-gas firing riot-squad-gear clad police, would proceed. My biggest worry was our Wednesday holiday would turn into a July 1st 2003-style […]

Summary conclusion To be clear; not will/may hard land but is hard landing. For several years I swatted away the notion that this was going to happen; because it didn’t. Indicators are now though pointing unequivocally in this direction and only the trajectory and speed of descent are moot. This will rattle some but for value […]