DÉJÀ VU

“This is like déjà vu all over again”, is a typical quip from American baseball legend (and famed tautologist), Yogi Berra (as is the one below). He’s not wrong but I prefer the lyrical view that déjà vu is “a checkpoint which marks that we are on the right path” (Sylvia Browne); in other words, if you have seen it before, be pleased. In this sense, the current geo-political and financial landscape is not virgin territory – but rather well trodden; and because it is so, we know, deep down, that it will change and become abundant once more. Good job too, because the recent headlines have all been pretty bleak whether that be US jobs data, tensions in the Koreas, a possible abandonment of the Euro, Hungarian debt or a circumspect G20 meeting of finance ministers and central bankers this weekend, also in Korea (South). The S&P 500 fell 3.4% on Friday (to 1064.88 and a four month low), which is a lot and, this morning, Shanghai joined in; the latter also remains stubbornly less than 80% of its 2010 starting value.

At the G20 meeting, there was more déjà vu, too, when the IMF said the Yuan was “substantially overvalued”. That said, and despite equity market fears of slowing growth in China (and with steel prices down 8.8% in as many weeks), the World Bank said that China’s economy will expand between 9 and 10% in 2010. “Growth in the first quarter (11.9%) was a bit overheated so it would be good that it slows a little”. China’s Finance Minister added that he intends to remain fiscally proactive and cautioned against any rapid and/or clumsy stimulus exits elsewhere in the G20. The PBOC Governor was similarly robust saying that while he was still evaluating events in Europe “China is confident the EU and the European Central Bank will be able to contain the risks of the region’s debt crisis”; and “the impact on Chinese exports shouldn’t be very big”.

“If you don’t know where you are going, you might wind up someplace else”.

Shanghai Composite:
Today: -2.09% at 2,500.31 at 11.30
Last week: +3.9%
YTD: -23.7%

Hang Seng:
Today: -2.36% at 19,313.05 at 12.35
Last week: +0.1%
YTD: -11.7%

Oil:
$70.33
Gold:
$1220.50
Euro/$
€1.193

1. China urges G-20 caution on economic stimulus exit
2. Zhou implies that he will keep a close eye on domestic economy
3. China’s trade unions push for pay rises
4. Wage rises to damp capital spending (Conch falls 2.6%)
5. China will not experience stagflation this Year, says NDRC
6. China house prices to dip 20-30% in “new few quarters”, says Barclays
7. China to apply tighter second mortgage rules to ‘locals’ of less than on year
8. China Vanke’s property sales fell 20% in year to end-May
9. Capitaland to build “affordable” homes in China
10. Sun Hung Kai sells HK$6.5 billion of apartments
11. Official calls China work-safety “grim”
12. China and US bicker over cut in military ties amid Korean tension
13. Expo expands

ENDS