Pragmatists will tell you that the sky is rarely blue; while scientists would add that for every push there is a pull. Today, we had a push from two PMI Indices which showed, pretty conclusively that the slow down in the Chinese economy will be just that: a slow down and not a collapse (albeit with a weather eye on input cost). Apparently at Anhui Conch, China’s largest cement company, they went home early by way of celebration. But at China Vanke, its largest developer, it was the opposite as the Nation’s bank regulator (the CBRC) said that it will “strictly implement” Government policies aimed at both controlling house prices and restraining “speculative” investment in real estate. Caxin also predicts cash flow problems for developers if sales are not good in September and October; 40% of their loans will mature by the end of this year.
Similarly, the Yuan remains weak against the dollar and the latest twist is that the PBOC will focus not just on the US currency but rather a currency basket.
On a more positive note, Citigroup is to triple its Chinese workforce to 12,000 over the next three years and, according to Sandford C Bernstein, “China is one of the most attractive and profitable countries in the World to operate a bank”. As they say in Scotland: “it is a thin wind that dries nobody’s washing”.
Shanghai Composite:
Today: -0.57% at 2,622.88 at close
This week: +0.8%
YTD: -19.9%
Hang Seng:
Today: +0.43% at 20,623.66 at close
This week: +0.1%
YTD: -5.7%
Oil futures: $72.39
Gold futures: $1249.70
Euro/$ spot: 1.2703
Headlines
- China manufacturing quickens
- Property shares fall
- Chinese developers my face severe cash flow problems by year end, says Caixin
- Yuan drops for a third day on signs China seeks stability versus a currency basket
- More investors
- China's small-cap stocks poised for a “correction”, says Citic
- Citigroup to triple its China workforce to 12,000 in three years
- China currency peg will not spur higher US import duties
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