Sweet and low

“China will soon hit another of its sweet spots, with an economy that is neither too hot nor too cold. They don’t come along too often these days, so don’t let it go to waste”. So says Stephen Green (no, not that one) who is Chief China Economist at Standard Chartered. Templeton agrees and says that China is a “bright spot” (it also says no global double-dip). These comments come ahead of a mass of economic data to be promulgated over the next few days, including trade figures (tomorrow) followed by industrial production and inflation (where the smart money says that its strength is short term and driven by a temporary spike in food).

Developers, however, remain unloved and their sub-index within the Shanghai Composite has fallen 26% this year, the worst performer among the five industry groups. At the time of writing, too, developers were down 1% today and look set to close at their lowest level since 19 July. JLL says that further constraints on property are inevitable. Jing Ulrich of JPMorgan (who is ranked by Forbes as among the 100 most powerful women in the World) disagrees and not only says that China should eschew further policy tightening (as the Government boosts the supply of affordable housing to ease prices) - but that it will not happen. PBOC Advisor Xia Bin agrees.

Meantime, US Treasury Secretary Tim Geithner said, yesterday, that Chinese officials need to allow the Yuan to rise more quickly against the dollar, in order to show China’s trading partners that it is following through on its promises. The currency gained 0.11% to 6.7868 per US dollar as of 10.29am in Shanghai, the first rise in three days. 12 month Non-deliverable Yuan Forwards, however, currently indicate appreciation of just 1.2%. In turn, this prompted International Strategy & Investment to say that “the greatest risk to the global economy in the coming years is US-China trade friction”.

Don’t worry though, because Goldman Sachs says that China’s stock market will be worth $41 billion against $5 trillion today, making it the World Number One; okay, that’s in 2030.

Shanghai Composite:
Today: -1.44% at 2,656.35 at close
This week: nc
YTD: -18.9%

Hang Seng:
Today: +0.37% at 21,167.27 at close
This week: +0.9%
YTD: -3.2%

Oil futures: $74.71
Gold futures: $1257.80
Euro/$ spot: 1.2697

Headlines

• China to introduce more property speculation measures, says Jones Lang LaSalle
• China does not need extra property controls amid new supply boost, says JPM’s Ulrich
• PBOC Adviser says property price increase is short term
• Gemdale property sales rose 41% in August; but are off 28% in first eight months
• China money rate drops to right-day low which supports demand for new debt
• PBOC may cut reserve requirement in H2
• PBOC sells three year bills at unchanged yield of 2.65%: and three months bills at 1.5704% (also unchanged)
• Templeton says World to avoid double-dip recession; and China is a "bright spot"
• Goldman sees $80 trillion emerging nations stock market by 2030, with China as number one at $41 billion
• Savile Row suit retailer expands in China
• Taiwan Stock Exchange looks to attract more than 50 listings on improved China ties