"Black Friday"

The day after Thanksgiving in the US (which is always a Friday), is known as ‘Black Friday’ – because it is the biggest shopping day of the year ($18 billion last year) and the day on which the majority of US retailers move (from the red) into the black profit-wise. It is also a lead indicator for the entire Christmas season. This year, too, there appears to be an unprecedented level of price discounting in order to attract buyers. Subsequently, the US Retail Federation predicts a gain of 2.3% for the entire holiday season (to $447 billion) which is also consistent with an incipient recovery in consumer spending: +2.8% in Q3; the best since Q4 2006. For the record, too, consumer spending accounts for more than two-thirds of US GDP.

To my knowledge, China does not celebrate Thanksgiving - and while it is good news for China’s exporters that US consumer spending is on the up - today is not ‘Black Friday’ either. In fact, it is more like ‘Moribund Friday’ as China’s Finance Ministry failed to draw enough demand at a bill sale for the first time since June i.e. it placed 58% of the Yuan 20 billion on offer. In turn, this reflects a cash shortage at the banks after the PBOC increased their reserve requirements twice this month. Similarly, the money markets continue to point the way to higher interest rates; and the seven day repurchase rate, which measures lending costs between banks, rose 25 basis points to 2.73%, the highest level since 30 September. In addition, Guotai Junan Securities, China’s largest stockbroker by revenue, is forecasting a hat trick of increases in benchmark rates by end-June next year.

Unsurprisingly, the Shanghai Composite drifted as investors adopt a ‘wait and see’ stance although consumer staples and cement stocks were in demand. Indeed, it is reported that cement prices in eastern China have risen 40% since August – and Anhui Conch had its best day (on Thursday) since the end of August. Elsewhere, the Asian Games in Guangzhou close tomorrow and the event has had a very significant economic benefit on the City with its budget of $18.3 billion. Did you know, too, that Guangzhou has a GDP greater than many small countries, including Vietnam and Morocco?

“Only Robinson Crusoe had everything done by Friday” - Anon

Shanghai Composite:
Today: -0.92% to 2,871.70 at close
This week: -0.6%
In November: -3.6%
Since 5 July: +21.5%
YTD: -12.4%

Hang Seng:
Today: -0.77% to 22,877.25 at close
This week: -3.1%
In November: -1.0%
YTD: +4.6%

Oil futures: $85.58
Gold futures: $1367.60
(new ‘immediate delivery’ high of $1424.30 on 9 November)
Euro/$ spot: 1.3237

EQUITIES & TRADING

• Stocks drop on tightening concerns
• Cement stocks advance on demand and prices (+40% in eastern China since August)
• Shanghai Futures trading is being tightening up
• Dalian Exchange to lift margins and daily trading limits to stabilise prices
• China’s credit-default swaps trading begins as the regulator seeks to implement tighter controls

MONEY

• Money markets continue to point way to higher interest rates
• PBOC fails to complete bill sale for first time since June

REAL ESTATE

• Guangzhou is to close Asian Games tomorrow as the City booms with $18.3 billion of spending

HONG KONG

• Hong Kong’s debt rating is raised by Fitch on economic growth and fiscal strength

IRON & STEEL

• Vale seeking depositary receipt listing in Hong Kong
• Brazilian steelmakers under pressure
• South African Government seeks agreement on iron ore prices with ArcelorMittal and Kumba