China & HK Archives - Page 49 of 61

June 20, 2012

China in deflation, and how to reflate it at all costs

Zarathustra: [Chinese] over-investment over the past many years, and particularly in the years after the financial crisis, has created massive over-capacity across the economy that no one is really able to quantify. We have already got over-building in the real estate sector which resulted in massive number of empty apartments and empty shopping malls…. We are also aware of the over-capacity and inventory build-up in various sectors like coal and steel….. steel industry profits have fallen by 96.7% in the first four months of the year compared to the same period a year ago….. actual CPI figures are already in negative territory on a month-on-month basis. In short, deflation is already here for China….

via China in deflation, and how to reflate it at all costs.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

June 20, 2012

Since Lehman’s collapse, China’s money supply has doubled

Zarathustra: We have just discovered that China’s M2 money supply has doubled once more since the collapse of Lehman brothers. M2 money supply currently stands at around RMB90 trillion, and it was at about RMB45 trillion the month before Lehman collapsed. Thus the so-called RMB4 trillion stimulus after Lehman’s collapse (which is more like a RMB8 trillion fiscal stimulus in reality) has translated into a RMB45 trillion increase in M2 money supply.

via Chart: Since Lehman’s collapse, China’s money supply has doubled.

Hat tip to macrobusiness.com.au

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 17, 2012

Asia-Pacific stocks surge on Greek election results

ASX 200 Index is testing resistance at 4120 after Greek voters narrowly favored the New Democracy party in Sunday’s election — meaning that Greece is likely to remain in the euro-zone. Bullish divergence on 21-day Twiggs Money Flow indicates medium term buying pressure — following breach of the descending trendline suggested that the correction was over. Follow-through above 4150 would strengthen the signal, offering a target of the May high at 4450.

ASX 200 Index

Dow Jones South Korea Index respected support at 402. Breakout above 420 would confirm that the down-trend is over. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal.

Dow Jones South Korea Index

Dow Jones Japan Index is testing the descending trendline and short-term resistance at 49. 63-Day Twiggs Momentum still reflects a primary down-trend, but breach of the descending trendline would warn that a bottom is forming.

Dow Jones Japan Index

Dow Jones Hong Kong Index is testing medium-term resistance at 388. Breach of the descending trendline warns that a bottom is forming. Upward breakout would indicate a rally to 440. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal.

Dow Jones Hong Kong Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 13, 2012

The China-driven commodities super-cycle debate: Nomura edition

Nomura: We have performed a detailed analysis of metal intensity of GDP for steel, copper and aluminium in the following pages, which we believe clearly outlines our view that China’s economy is not large enough (in GDP terms) to support a continuation of the rapid growth in metal consumption seen in 2000-11.

Our conclusions are based on an analysis of China’s metal intensity of GDP rather than metal consumption per capita, and reflect a simple premise that while a country’s population size may be an important indicator of a country’s potential demand for industrial metals (per capita), the ability to meet potential demand is determined by the quantity of metal consumed in relation to the size of economic output (ie, GDP, not GDP per capita). Hence, in our view, metal intensity of GDP is a more important variable to monitor than per capita metal consumption.

Zarathustra: The reason is that, according to Nomura, the per-capita analysis ignores the composition of China’s GDP growth. China’s investment driven growth is very metal intensive.

via The China-driven commodities super-cycle debate: Nomura edition.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 13, 2012

Has the Chinese government given up on rebalancing already?

Zarathustra: As more and more evidence suggests that the Chinese economy is slowing rapidly, there is also more and more evidence that the Chinese central government has given up on real estate market curbs even though they say they will continue, and they have given up cleaning local government debts even though they said they were cleaning them up. And by giving these up, they have also unofficially given up on rebalancing the economy away from investment driven to consumption driven once more.

via Has the Chinese government given up on rebalancing already?.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 12, 2012

China: Double top

Shanghai Composite Index threatens to complete a double top reversal with breakout below the neckline at 2250. Failure of support would offer a target of 2000*. Respect of the zero line by 63-day Twiggs Momentum warns of a continuing primary down-trend. Respect of support is less likely, but would indicate that a bottom is forming.

Shanghai Composite Index

* Target calculation: 2250 – ( 2500 – 2250 ) = 2000

Hong Kong’s Hang Seng Index found medium-term support at 18000. A rally that respects resistance at 20000 would confirm the primary down-trend signaled by 63-day Twiggs Momentum below zero. Breach of primary support at 17500/18000 would offer a target of 16000*.

Hong Kong Hang Seng Index

* Target calculation: 18 – ( 20 – 18 ) = 16

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 4, 2012

Hong Kong, India and Singapore

Dow Jones Hong Kong Index is headed for primary support at 360. Failure would confirm the primary down-trend signaled by 63-day Twiggs Momentum below zero.

Straits Times Index

India’s Sensex is testing support at 16000/15800. Failure would mean another test of primary support at 15000/15200. Reversal of 13-week Twiggs Money Flow below zero indicates selling pressure. Failure of primary support would offer a target of 12000*.

BSE Sensex Index

* Target calculation: 15 – ( 18 − 15 ) = 12

Dow Jones Singapore Index broke medium-term support at 222, indicating a test of primary support at 208/210. Reversal of 13-week Twiggs Money Flow below zero indicates selling pressure. Failure of primary support would offer a target of 190*.

Straits Times Index

* Target calculation: 210 – ( 230 − 210 ) = 190

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 31, 2012

EconoMonitor » U.S.-China Trade War in the Offing?

China wants to develop what it sees as key industries by giving Chinese companies a leg up in both the Chinese and global market. Its trading partners don’t want to see their firms placed at a disadvantage, and in several cases have challenged Chinese policies. China is challenging them right back, arguing that those countries do the same thing, and that people who live in protectionist glass houses shouldn’t throw stones. If they do, China can match them “tit for tat.” (A similar battle involving cross-accusations and threats between the EU and China began unfolding this week — you can read about it here).

There’s a critical difference, though, between China and its trade partners. They all may both have policies that can be called protectionist, but they come from different starting points. In the U.S., trade restrictions and subsidies tend to be the exception to the rule, and when they do occur, are usually transparent. There’s a public approval process and an overt policy that can be challenged at WTO. In China, restrictions and subsidies are pervasive, due to the large state role in the economy, and often hard to pin down.

via EconoMonitor : EconoMonitor » U.S.-China Trade War in the Offing?.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 28, 2012

Hong Kong & China

Hong Kong’s Hang Seng Index is consolidating above 18500 on the weekly chart. Reversal of 13-week Twiggs Money Flow below zero warns of selling pressure, strengthening the bear signal from 63-day Twiggs Momentum. Breach of 18500 would test primary support at 17500 — and breach of 17500 would offer a target of 15000*. Recovery above 20000 remains unlikely but would warn of a bear trap.

Hang Seng Index

* Target calculation: 17500 – ( 20000 – 17500 ) = 15000

Shanghai Composite Index is headed for a test of primary support at 2250; breach would offer a target of 2000*. Reversal of 63-day Twiggs Momentum below zero indicates continuation of the primary down-trend. Recovery above 2500 is unlikely but would signal a primary advance.

Shanghai Composite Index

* Target calculation: 2250 – ( 2500 – 2250 ) = 2000

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 22, 2012

Hong Kong & China: Hang Seng breaks support

Hong Kong’s Hang Seng Index fall below 20000 confirms the earlier primary down-trend signaled by 63-day Twiggs Momentum reversal below zero. Expect a rally to test the new resistance level at 20000. Respect would indicate a decline to 17500. Recovery above 20000 is unlikely but would warn of a bear trap.

Hang Seng Index

Dow Jones Shanghai Index is more resilient, respecting the rising trendline and with 63-day Twiggs Momentum above zero. Breakout above 310 would signal a primary up-trend, but penetration of the rising trendline would test primary support at 275.

Dow Jones Shanghai Index

* Target calculation: 310 + ( 310 – 280 ) = 340; 280 – ( 310 – 280 ) = 250

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.