Hugh Hendry: forget Europe and the US, the next crisis will be in China
He’s back. Hugh Hendry, the outspoken hedge fund manager best known for his bearish views on China and this jerky, homemade video of empty malls and deserted developments, has come out with a new letter to his investors after an 18 month absence.
China bulls will find few comforting words in it though. Quite simply, Hendry thinks China’s massive property bubble will burst in a spectacular fashion and become the focal point of the next financial crisis. Continue reading »
Chinese banks: doubts linger
Shares in AgBank – China’s No.3 lender by market value – fell 3 per cent in Hong Kong on Friday after it released full year earnings that came up short. The broader market was also down, but only by 1 per cent.
Though some analysts say investors can dismiss the miss, the market looks nervy. Continue reading »
[video] Carson Block on the Muddy Waters approach
Carson Block, founder and chief executive of the company Muddy Waters Research, which provides analyst coverage of under-researched Chinese stocks listed in North America, talks to the FT after winning the award for best newcomer at the 2012 FT ArcelorMittal Boldness in Business Awards.
China GDP: what to watch
China’s Q4 GDP figures are due on Tuesday. What should we look out for? Here are five things economists say are worth keeping an eye on.
Guest post: EM not just about China
By Jonathan Anderson, head of Asia-Pacific Economics at UBS
Almost exactly nine years ago – in the summer of 2002 to be exact – two extraordinary things happened.
The first is that China’s astounding growth story first began to make itself truly felt on the global stage. The latter part of that year marked the beginning of China’s decade-long explosion in commodity and primary resource imports, with the mainland quickly establishing itself as the world’s largest consumer of iron ore, cement, soybeans and a host of other products. (See chart below after the break.) Continue reading »
Is China bubble now an anti-China bubble?
Sino Forest is the latest company to exemplify what is fast becoming a truism: if a company has Sino or China in its name and was listed abroad via a reverse takeover, shorting it might be a very profitable play.
The Toronto-listed forestry firm plunged more than 20 percent on Thursday following a highly critical research report. China MediaExpress Holdings, a firm that places ads on buses, had its Nasdaq-listed stock halted in March after falling nearly 50 percent in six weeks. China Agritech, another Nasdaq-listed firm, had lost more than 60 percent since late last year before its shares were suspended. Continue reading »
Guest post: the state of Hong Kong property
By Paul Louie, head of property research for Asia ex-Japan at Nomura
Back in 1998 in the aftermath of the Asian Crisis, Hong Kong embarked on an ambitious quest to become a “World City” in the same fashion as New York and London. It highlighted human capital and the living environment as pivotal to its development. Now, 14 years after the 1997 handover, the focus is not on whether Hong Kong has succeeded in that quest but on home prices, which are almost back to 1997 highs. Observers now say: Hong Kong has another property bubble on its hands.
But if Hong Kong has turned itself into a World City, is it so surprising that home prices are up around 1997 highs? Continue reading »
China-Australia ties – too close?
This is the fifth in a beyondbrics series on bubbles in the Chinese economy
Few advanced nations in the developed world have hitched a ride on the tails of the Red Dragon to the same degree as Australia.
The Wonder from Down Under, now in its 20th year of uninterrupted growth, shares an increasingly intimate trading relationship with China that eclipses all others. Continue reading »
Guest post: China’s non-bank credit bubble
By Victor Shih, associate professor of political science, Northwestern University. This is the fourth in a beyondbrics series on bubbles in the Chinese economy
At the end of April, Baotou-based Chinese billionaire Jin Libin set himself on fire to escape his creditors. His method of dealing with the situation was disturbing enough, but the structure of his debt was equally shocking. Investigators found that his billion renminbi business owed banks only 150 million RMB, but owed individual creditors and informal banks Rmb1.23bn.
In other words, he owed private creditors and informal banks over eight times what he owed the banks. Although extreme, Jin’s debt situation suggests a highly risky debt bubble that seems to be growing without much control outside of the banking system. Continue reading »
Chinese taste for wine grows
This is the third in a beyondbrics series on bubbles in the Chinese economy
When a bottle of wine costs more at an auction than an undergraduate education at Harvard, some hear alarm bells ringing alongside the rap of the auctioneer’s gavel.
But as the latest fine wine auction at Christie’s in Hong Kong last week showed Chinese interest in the market remains unsatiated. Continue reading »
Guest post: Has China overinvested in infrastructure
By Jian Chang at BarCap. This is the second in a beyondbrics series on bubbles in the Chinese economy
Ghost towns, empty airports, highways to nowhere – these are striking stories that often lead to concerns about China’s investment bubbles, NPLs/local government debt, and a banking or sovereign crisis in the pipeline. Continue reading »
Chinese property: a bubble ready to pop?
Whether China’s real estate market is a bubble that could pop, knocking out Chinese growth and shaking the world’s economy, is a question that is now being asked by everyone from Brazilian iron ore traders to hedge fund managers in the City. In the first of a series on beyondbrics – with a separate series on FT.com – Jamil Anderlini, the FT’s Beijing bureau chief, says that whether it pops or not, the current situation is unsustainable. Continue reading »
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