"No irony in China"

Written on 28 June; posted on Monday, 5 July 2010 [GMT +1]

I was in Dublin last week for the 69th Conference of Euroconstruct, an august body which forecasts the outlook for Europe’s construction industry, overall, and the individual futures of 19 countries, including Ireland. Fortunately, I was also asked to present a paper: “Pitfalls, Recovery and Opportunities”.

If you have had the pleasure of visiting Ireland, you will have shared its great beauty, wonderfully warm hospitality and a remarkable, omnipresent serenity. You may have also heard the aphorism: “the luck of the Irish”, which is actually ironic. Indeed, when they arrived en masse as immigrants to America (following crop failures and a famine for its staple food, the potato, in the mid-1800’s), the Irish were not popular and the locals did not believe they were capable of success. Hence the dictum.

Over the next three years, the Irish construction industry will not be lucky either. For example, this year, the industry will fall 28% in real terms (and this after 2009’s minus 35%). These are incredible declines as the 'Celtic Tiger' moves into reverse, aided and abetted by Europe’s debt crisis. Similarly, even by 2012, the industry will still only be only operating 40% of its 2007 peak.

There are no such constraints in China where construction and the economy continue to grow at a rate in high single digits and will do so for the foreseeable future. The Nation also seems to have had a good G-20 Summit, despite some currency sabre-rattling by Obama. Closer to home, AgriBank looks set to raise as much as $20 billion in its IPO and Shenyin & Wanguo Securities says the stock market could rise 17% in the second half of this year. Similarly, industrial profits rose 82% in the first five months of 2010 and Deloitte says China will remain one of the most competitive nations over the next five years. In my view, there is not an ounce of irony in talking about “the luck of the Chinese”.

Shanghai Composite:
Today: -0.61% at 2,537.23 at 11.30
Last week: +1.6%
YTD: -22.6%

Hang Seng:
Today: +0.32% at 20,757.81 at 12.06
Last week: +2.0%
YTD: -5.1%

Oil:
$78.78
Gold:
$1256.60
Euro/$
1.2378

• Yuan Forwards extend gains as US sees further appreciation
• Hu says G-20 must co-ordinate to consolidate recovery
• Yuan reform and European debt crisis to impact exports
• China to create more channels for Yuan use
• China shows “bad faith” in Yuan move
• China stocks to rise 17% in H2, says Shenyin & Wanguo
• AgriBank IPO at up to Yuan 2.68 i.e. $20 billion
• China H2 fiscal revenue growth at least 10%
• Less need to raise interest rates need to rise, says Li
• Chinese banks see their capital adequacy ratio rise to 11%
• China banks asset deterioration is a near certainty, says Fitch
• China should build up its corporate bond market
• China considers allowing foreign firms to issue Yuan stocks
• 331 companies have applied for listing on Chinext
• Wen urges harmonious employment relations
• Chinese industrial profits jump 82% from year earlier
• China, India, Korea to stay most competitive, says Deloitte
• China says cuts to export rebates is not a policy change
• China may limit processing for export business
• Steel prices in China fall 6%
• Death toll in the south China floods rises to 381