Tuesday, 28 January 2014

China - push-pull

In China, they are preparing for the new Chinese New Year (Friday 31st January) and - unsurprisingly - are putting out the fires ahead of this, for example this story did not surprise me:
 
'China Credit Trust reached a last-minute deal with investors to repay their investment in the three-billion-yuan (about 500 million U.S. dollars)product, deflating concerns that default would pound investor confidence in shadow banking and trigger credit crunches'
 
What I found most interesting about the above story is the linked press release from the official Xinhua news agency.  Did you see the headline they used?
 
'China dodges major shadow banking default'
 
That is the sort of headline that the Western media would write.  Interesting.
 
In other news, Fast FT reports that:
 
'Shares of provincial coal producer Shaanxi Coal, the largest IPO seen this month after a 15-month freeze, climbed 25 per cent in the first minutes of Shanghai trading today, before being suspended.
The solid rise follows a series of smaller IPOs in Shenzhen and Shanghai that have repeatedly been halted after rising by the maximum amount allowed'.

Meanwhile industrial profits growth has fallen to mid-single growth year-on-year in the latest data released.  That difficult backdrop again. 

A week or so ago I mentioned that watching the interbank rates or the level of the Shanghai bourse was more insightful than most statistics (such as backwards looking GDP statistics).  That remains the case.  And in this volatile time for markets, how far below the 2,000 index points level for the Shanghai bourse have we fallen?


Funnily we are above 2,000 index points.  Battle to recommence post Chinese New Year.  China remains complex and not easy to summarise.  The easiest call remains that it is the largest consumer growth market out there. 
 
 

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