Shanghai shares have hit levels not seen since the depths of crisis in 2009. But James Mackintosh, investment editor, says the domestic gloom is combining with a growing faith in the Chinese outlook among international investors. Read more
Those of a bearish inclination have been having a hard time this summer in the west, but China is a whole ‘nother thing. The Shanghai Composite is at another three and a half year low, and has been falling, on and off, since its post-crisis peak in August 2009.
Another way of looking at China is to say it is suffering from the effects of an outrageous policy-induced bubble, which was partially reinflated by the government during the crisis.
This chart shows the Shanghai index against the Nasdaq during the dotcom bubble, both rebased. In green is the S&P 500. The wild swings in China and pure-play dotcoms make the booms and busts of the S&P look tame – but still left those investors able to get their money into Chinese onshore shares (protected by capital controls) better off, at least for the moment.
Investors in luxury goods producers tend to spend a lot of time following what’s going on in China, for good reason. China’s legions of corrupt officials have a penchant for bling (as well as luxury cars and gambling), and plenty of ability to garner the cash needed for fancy western watches and handbags. Lately they’ve been cutting back, as the slowing economy and rising scrutiny from bloggers and the public makes open diplays of wealth less acceptable.
It might be easier simply to focus on what is going on in the US. Are households finding their share portfolios rising faster than their house prices? Shares are easier to cash in to fund that oh-so-desirable Cartier watch, although most people would have to sell their house to afford a £1.2m handbag. Read more
The S&P 500 has almost completed its round trip, and done so remarkably quickly. It only has about 5 per cent to go before it reaches its all-time high from 2007. Today’s video guest, the ever-interesting David Ranson, suggests that this was predictable, because asset markets reliably follow an exponential recovery path after a big fall.
Certainly, that pattern fits this recovery remarkably well: Read more
What should we believe about China? That is the topic of today’s Note video with James Kynge, principal of the FT’s China research service, China Confidential. Uncertainty currently roils both China’s economics and its politics.
Plainly it is hard to spin the abrupt and unexplained disappearance of prospective premier Xi Jinping in any way that is positive. He is supposedly about to become the world’s second most powerful man – we still do not even know the date for the Congress that will approve that appointment, but it is due next month – and yet he has suddenly disappeared from public life. The news overnight (after we recorded the video) that he was named in a list of dignitaries expressing condolences to the family of a deceased , removes some of the more alarming explanations for his absence, but speculation about his health continues. The continued refusal to provide any official explanation for his absence is a classic example of Chinese opacity. Read more
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This blog is about asset allocation at the global level. It is an ongoing attempt to explain why investors and markets behave the way they do.
John Authers officially takes the "Long View", while James Mackintosh takes the "Short View" when it comes to investment decisions. In practice both of us end up taking both long- and short-term views, and occasionally disagreeing with each other; all comments and disagreements are very welcome.
James Mackintosh is the Financial Times' Investment Editor, writing and presenting the daily Short View column and video. In 16 years at the FT his posts have included comment editor, motor industry editor and hedge funds correspondent, as well as spells in the Parliamentary lobby and Paris. He was the first reporter hired for FT.com, joining two weeks before it launched.
James has a degree in philosophy and psychology from the University of Oxford, where he spent two further years in post-graduate study of philosophy. If he wasn't here, he'd be skiing.
John Authers is the Financial Times' Senior Investment Columnist, writing the Saturday Long View and a regular Monday column. In a 22-year career at the FT, his previous posts have included global head of the Lex column, investment editor, US markets editor, Mexico City bureau chief and US banking correspondent. His latest book is The Fearful Rise of Markets.
John has a degree in Philosophy, Politics and Economics from the University of Oxford, and an MBA from Columbia University. Perhaps more interestingly, he captained the highest scoring team in the history of University Challenge while at Oxford, and also once sung in Pavarotti's backing choir.