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Hundreds of medical personnel are rushing to Wuhan following yesterday’s tragic death of Doctor Liang Wudong, of the ENT department of Hubei Xinhua Hospital, who died Saturday while fighting to suppress the virus. The South China Morning Post reports that 1,350 medics (presumably from the PLA) have already arrived in the city, and another 1,000 are expected to arrive soon.

As the number of confirmed cases surges past 2,000, China is scrambling to build not one, but two, SARS treatment-model hospitals in Wuhan (remember, Wuhan is a massive city of 11 million). Authorities have told the press that they expect both hospitals and their combined 2,300 beds to be operational within half a month.

Even though researchers have purportedly cast doubt on the theory that the coronavirus didn’t make the jump from animals to humans thanks to a shady food market that trafficking in live wild animals, officials in Beijing announced Sunday that the sale of live wild animals, including bats and snakes, at markets, supermarkets, restaurants and e-commerce platforms. But we thought eating bats was a delicacy and an ingrained cultural practice not to be criticized or stifled?

As we reported last night (Sunday morning in Beijing), health officials in Hubei Province confirmed thirteen more deaths on Saturday, while another was reported in Henan Province. Perhaps most alarmingly, last night, we learned that a patient has reportedly succumbed to the virus in Shanghai as well. In that case, the victim was an 88-year-old man who was suffering from preexisting health issues. AFP adds that 40 cases have been confirmed in the city: 37 stable, one critical, one recovered, and one (88yo man with comorbidities) died. They are also investigating 95 additional suspected cases.

…click on the above link to read the rest of the article…

Bubbles, Balloons, Needles and Pins

October 19, 2018

Bubbles, Balloons, Needles and Pins

M. C. Escher Meeting (Encounter) 1940

It’s no surprise that China has its own plunge protection team -but why were they so late?-, nor that Beijing blames its problems on Trump’s tariffs. GDP growth was disappointing at 6.5%, but who’s ever believed those almost always dead on numbers? It would be way more interesting to know what part of that growth has been based on debt and leverage. But that we don’t get to see.

So we turn elsewhere. How about the Shanghai Composite Index? It may not be a perfect reflection of the Chinese economy, no more than the S&P 500 is for the US, but it does raise some valid and curious questions.

Borrowing from Wolf Richter, here are some stats and a graph::
• Lowest since November 27, 2014, nearly four years ago
• Down 30% from its recent peak on January 24, 2018, (3,559.47)
• Down 52% from its last bubble peak on June 12, 2015 (5,166)
• Down 59% from its all-time bubble peak on October 16, 2007 (6,092)
• And back where it had first been on December 27, 2006, nearly 12 years ago.

The first thing I thought when I saw that was: how on earth is it possible that in an economy that’s supposedly been growing 6%+ for a decade, stocks have gone nowhere at all? And obviously the role of the Shanghai index is different from that of the S&P, the DAX or the FTSE, but at the alleged Chinese growth rate, the economy would have almost doubled in size in 10 years. And none of that is reflected in stocks?

And if you think Shenzhen is a better barometer of ‘real’ China, Tyler Durden had this graph yesterday. Not the same as Shanghai, but similar for sure.

…click on the above link to read the rest of the article…

The yuan-oil future and gold

March 30, 2018

The yuan-oil future and gold

“There can be little doubt that the introduction of the yuan-denominated oil future has been a major strategic step for China.”

Regular readers of Goldmoney’s research will be aware that we were among the first to alert western financial markets that China would introduce a new oil futures contract priced in yuan, months before it was officially admitted that the plans for the contract were being finalised and a date for trading was being planned.ⁱ

Trading in the new Shanghai oil future commenced last Monday, and on the first three days trading there were 151,804 contracts traded with a turnover value of 65bn yuan. It is the first futures contract listed on China’s mainland available to overseas users, putting them on the same footing as domestic investors. There are 15 benchmark contracts for different delivery dates between September next and March 2019.

There is little doubt that the Chinese government views this contract as an important development, with international commodity trading houses, such as Glencore and Trafigura, encouraged to participate. Furthermore, state-owned banks would have been on hand to ensure the necessary currency and financial liquidity is available.

The Chinese are likely to ensure trading liquidity continues to build in its new oil contracts before its oil suppliers routinely use them against physical oil deliveries. Presumably, this is one reason the first delivery date is in September, while actual shipment is never more than a month or so.

This contract goes head-to-head against the petrodollar and is the first serious challenge to it since its inception in the mid-1970s. The petrodollar was born out of the monetary chaos that led to the end of the Bretton Woods Agreement, when excess dollars in foreign hands were redeemed for gold. In that sense, being the first significant threat to the petrodollar, this contract could mark the end of a monetary era.

…click on the above link to read the rest of the article…

Is Peak Car Headed for Seneca’s Cliff?

January 9, 2018

Is Peak Car Headed for Seneca’s Cliff?

This text follows my recent keynote at Seoul Smart Mobility International Conference. The author thanks  Seoul Design Foundation and @Seoul_gov for their invitation. I also thank XuanZheng Wang, professor, China Central Academy of Fine Arts (CAFA), for alerting me to the @Mobike developments.

Two hundred people per second now climb onto a dockless bike somewhere in China; the blue dots (above) denote transactions in Shanghai.

Considering that dockless bike sharing platforms were only launched two years ago, in 2015, this growth rate is remarkable.

The biggest company, Mobike, already operates more than seven million bikes across over 160 cities globally – and a merger with its biggest rival, Ofo, is in the offing.

For its US launch Mobike (above) has teamed up with AT&T for its networks. Qualcomm will make the GPS-enabled smart tags attached to each bike. And iPhone maker Foxconn will manufacture the actual bikes.

 
Negative side effects have accompanied this explosive growth, of course; entrances to subway stations, for example, have been blocked by piles of carelessly dumped bikes (above) .

Beijing and Shanghai have banned the addition of more bikes until their users learn, or are compelled, to use designated parking areas. Wayward user behaviour may well be just a blip; penalties (and inventives) cxan easily be added to dockless bike software.

When sharing platforms enable new relationships between people, goods, equipment, and spaces, the notion of mobility as a discrete economic sector no longer makes sense.

News that Ikea is buying Task Rabbit is further confirmation of this convergence

The bigger story now unfolding (above) seems to be one of system transformation – a peak-car tipping point – that’s been slowly ‘brewing’ for a very long time.

(I don’t believe the concept of “Personal Era” is a timely one – but I’ll come to that in my next post).

…click on the above link to read the rest of the article…

Don’t listen to the ruling elite: the world economy is in real trouble

May 29, 2016

Don’t listen to the ruling elite: the world economy is in real trouble

Andy Xie says those attending the G20, Davos and other wasteful meetings are wrong to try to pin the blame for the turmoil on people’s psychology; all signs point to a prolonged period of global stagnation and instability

The G20 working group meeting in Shanghai didn’t come up with any constructive proposals for reviving the global economy and, instead, complained that the recent market turmoil didn’t reflect the “underlying fundamentals of the global economy”. The oil price has declined by 70 per cent since June 2014, while the Brazilian real has halved, and the Russian rouble is down by 60 per cent. The global economy is on the cusp of another recession, and these important people blamed it all on some sort of psychological problem of the people.

Over the past two decades, the global economy has been blessed with the entry and participation of 800 million hard-working Chinese, plus the information revolution. The pie should have increased enough in size to make most people happier. Yet, the opposite has happened. The world has gone from one crisis to another. People are complaining everywhere. This is due to mismanagement by the very people who attend the G20 meetings, the Davos boondoggle, and so many other global meetings that waste taxpayers’ money and put inept leaders in the limelight.

One major complaint that people have is that the system is rigged – that is, the rising income concentration is not due to free market competition, but a rigged system that favours the politically powerful. This is largely true. The new billionaires over the past two decades have come mostly from finance and property. Few made it the way Steve Jobs or Bill Gates did, creating something that makes people more productive.

…click on the above link to read the rest of the article…

The FX Mexican Standoff

February 27, 2016

The FX Mexican Standoff

Theodor Horydczak Lincoln Memorial 1925

There has been quite a bit of talk lately over the need for a new Plaza Accord, something several parties saw happening during this weekend’s G20 summit in Shanghai -hence the term ‘Shanghai Accord’-. (On September 22, 1985 at the Plaza Hotel in New York City, France, West Germany, Japan, the US, and the UK signed an accord to depreciate the US dollar vs the Japanese yen and German Deutschmark by intervening in currency markets).

Unless all the G20 finance ministers and central bankers gathered in China are in close and secretive cahoots, though, it doesn’t look like it is going to happen. And that seems to both make sense and not. What those advocating such an accord are calling for is a -large- devaluation of the Chinese yuan (RMB) vs the USD and yen -perhaps even the euro-, but the climate simply doesn’t look ripe for it.

Still, the problem is, if they don’t do it, they open the doors to a whole lot more volatility, unpredictability and losses in the markets. All things that those markets do not want. Because, like it or not, the yuan is overvalued, China’s fabricated trade numbers are increasingly under scrutiny, and a large devaluation could settle things at least for a while.

However, Beijing looks too full of hubris and pride -and inclusion in the IMF basket of currencies is an issue too- to do what seems natural. Lest we forget, no matter how much China seeks to obfuscate the numbers, everybody already knows that numbers like producer prices and exports, and most importantly imports, have seen steep falls, and for a long time too.

China’s oil tanks look as close to overflowing as the American ones, and without those oil imports, who knows who bad import numbers would have looked?

…click on the above link to read the rest of the article…

Guess What Happened The Last Time The Chinese Stock Market Crashed Like This?

July 3, 2015

Guess What Happened The Last Time The Chinese Stock Market Crashed Like This?

The second largest stock market in the entire world is collapsing right in front of our eyes. Since hitting a peak in June, the most important Chinese stock market index has plummeted by well over 20 percent, and more than 3 trillion dollars of “paper wealth” has been wiped out. Of course the Shanghai Composite Index is still way above the level it was sitting at exactly one year ago, but what is so disturbing about this current crash is that it is so similar to what we witnessed just prior to the great financial crisis of 2008 in the United States. From October 2006 to October 2007, the Shanghai Composite Index more than tripled in value. It was the greatest stock market surge in Chinese history. But after hitting a peak, it began to fall dramatically. From October 2007 to October 2008, the Shanghai Composite Index absolutely crashed. In the end, more than two-thirds of all wealth in the market was completely wiped out. You can see all of this on a chart that you can find right here. What makes this so important to U.S. investors is the fact that Chinese stocks started crashing well before U.S. stocks started crashing during the last financial crisis, and now it is happening again. Is this yet another sign that a U.S. stock market crash is imminent?

Over the past several months, I have been trying to hammer home the comparisons between what we are experiencing right now and the lead up to the U.S. financial crisis in the second half of 2008. Today, I want to share with you an excerpt from a New York Times article that was published in April 2008. At that time, the Chinese stock market crash was already well underway, but U.S. stocks were still in great shape…

…click on the above link to read the rest of the article…

Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)

June 29, 2015

Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)

Carnage…

*CHINA STOCK PANIC SELLING TO CONTINUE, CENTRAL CHINA ZHANG SAYS

This leave China’s CSI-300 broad stock index futures up just 7% year-to-date…

*CHINA CSI 500 STOCK-INDEX FUTURES FALL BY MAXIMUM 10% LIMIT
*CHINA CSI 500 STOCK-INDEX FUTURES FALL BY LIMIT FOR 2ND DAY

*HKEX DROPS AS MUCH AS 7.3%, MOST SINCE SEPT. 2011
*SHANGHAI COMPOSITE INDEX EXTENDS DROP TO 7.5%
*SHANGHAI COMPOSITE HEADS FOR BIGGEST 3-DAY DROP SINCE 1996

Carnage-er…

*CHINA’S CSI 300 INDEX FALLS 3.4% TO 4,190.3 AT BREAK
*CHINA’S SHANGHAI COMPOSITE FALLS 3.8% TO 4,035.48 AT BREAK
*CHINA’S CSI 500 STOCK INDEX FUTURES EXTEND LOSSES TO 5.7%
*CHINEXT INDEX PLUNGES 7.8% FOR 3-DAY 20% SLIDE

After The People’s Daily proclaimed… “investors were moved to tears” thanks to the PBOC’s actions…

*FOUNDATIONS FOR A-SHARES ARE `SOLID’: CHINA SECURITIES JOURNAL
*CHINA STOCK MARKET TO HAVE 30 YEARS `GOLDEN AGE’: SEC. JOURNAL

…click on the above link to read the rest of the article…

Housing Crash in China Steeper than in Pre-Lehman America

February 27, 2015

Housing Crash in China Steeper than in Pre-Lehman America

China has long frustrated the hard-landing watchers – or any-landing watchers, for that matter – who’ve diligently put two and two together and rationally expected to be right. They see the supply glut in housing, after years of malinvestment. They see that unoccupied homes are considered a highly leveraged investment that speculators own like others own stocks, whose prices soar forever, as if by state mandate, but that regular people can’t afford to live in.

Hard-landing watchers know this can’t go on forever. Given that housing adds 15% to China’s GDP, when this housing bubble pops, the hard-landing watchers will finally be right.

Home-price inflation in China peaked 13 months ago. Since then, it has been a tough slog.

Earlier this month, the housing news from China’s National Bureau of Statistics gave observers the willies once again. New home prices in January had dropped in 69 of 70 cities by an average of 5.1% from prior year, the largest drop in the new data series going back to 2011, and beating the prior record, December’s year-over-year decline of 4.3%. It was the fifth month in a row of annual home price declines, and the ninth month in a row of monthly declines, the longest series on record.

Even in prime cities like Beijing and Shanghai, home prices dropped at an accelerating rate from December, 3.2% and 4.2% respectively.

For second-hand residential buildings, house prices fell in 67 of 70 cities over the past 12 months, topped by Mudanjiang, where they plunged nearly 14%.

…click on the above link to read the rest of the article…

Official Suspected of Biggest Financial Fraud in China’s History Investigated

February 9, 2015

Official Suspected of Biggest Financial Fraud in China’s History Investigated

The high-living nephew of a former Chinese communist leader is said to be in the crosshairs of the Party’s anti-corruption investigators, according to a number of reports in the Hong Kong press recently.

Hong Kong press reports are not always reliable, but often enough include details about affairs inside the Party that cannot be reported in the mainland for political reasons. Hong Kong publications are also used as ways for political factions in China to send messages to one another and the public.

Wu Zhiming is a high-level official in the southern city of Shanghai, long a power base of the faction of Jiang Zemin, who ruled the Communist Party from 1989 until 2002, and who then cast a shadow over Chinese politics for the next decade.

The reports say that Wu and Jiang’s eldest son, Jiang Mianheng, were together involved in a notorious financial scandal in 2007. The level of fraud involved reached a mind-boggling one trillion yuan (US $160 billion), the reports claimed.

Hong Kong’s Cheng Ming magazine reported on the matter in its latest monthly issue: Wu Zhiming, currently the chairman of the Shanghai Political Consultative Conference, is being investigated and unable to leave the country, the reports said.

…click on the above link to read the rest of the article…

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