Top Asia fund manager bearish on China

(20-03-2011, 02:12 PM)d.o.g. Wrote:

port Wrote:i will like to add that the article says with rising wages, increased consumption will follows. it's logical to follow this line of thought n will readily convince a lot of us who r schooled to think logically. in reality, it seldom works in the stock markets.

i made a mistake of buying into a cement firm with operations in sichuan when the sichuan earthquake occurred some yrs ago, thinking it should benefit from an increase in demand from reconstruction of sichuan. china put a price cap on cement prices and my beloved investment in the cement co. is still in the red.

The cement firm sounds like San Teh.

Investors tend to underestimate just how much the Chinese government interferes in the economy. Many prices are manipulated to a very large extent. Investors who bet on macro trends have gotten caught when they bought the supposed beneficiaries, especially when they overpaid thinking the secular growth would bail them out. A short list of sectors that have been or are currently affected include:

Fertilizer (price controls, then export restrictions)
Rare Earths (export restrictions)
Electricity (tariff controls)
Petrol (refiners sell at a loss)
Cooking Oil (price controls)
Pork (direct imports)
Residential Property (unit sizes, cancellation of land auctions, property taxes, and mortgage restrictions)
Banking (reserve ratios, interest rates, lending quotas, consolidation of off-balance sheet lending)

As usual, YMMV.

it's asia cement china listed in hk.

currently, looking at stxpo 100. it seems the market has discounted the 25 yr long term contracts it secured in 09 n 010 with vale n fibria to ship iron ore n wood pulp resp. from brazil to china

another abnormality is the price diff of stxpo quoted on krx n sgx which brings to mind the A/H share premium/discount of chinese stks traded in shanghai n hk.

could the explanation be that it should trade at a discount in sg compared to korea cos the trading volume here is low? read somewhere we can benefit from an illiquidity premium

port Wrote:could the explanation be that it should trade at a discount in sg compared to korea cos the trading volume here is low? read somewhere we can benefit from an illiquidity premium

IIRC the STXPO shares are fungible i.e. you can transfer between the 2 exchanges albeit with a time lag. There was a lot of arbitrage going on in the first few weeks of the dual-listing IIRC. Usually for fungible securities the price difference is smaller than the frictional cost i.e. trading plus hedging. Otherwise a professional arbitrageur would short in the expensive market, then buy in the cheap market and transfer the shares for delivery, earning a risk-free return. If the expensive market does not allow short selling, then the arbitrageur is exposed to price movements during the operation, so it is not a true arbitrage.

H and A shares are not fungible so they are 2 different markets despite identical underlying economic interests.

bought a small qty of stxpo recently n realized the seller was citigroup. estimated that the supply of shares is abt 10m on sgx with the rest of abt 195m in korea. seemed to me most of local investors hv migrated their shares to korea for trading liquidity.

stx closed up on krx on fri at 9880 krw approx. sgd 11.16 while it was down on sgx at 10.68, 24 bids diff.

>Last year, Singapore was arguably a richer place than the UK, but growing at a faster rate than China...

How did he come to the conclusion that Singapore was richer than the UK ?

(20-03-2011, 10:56 PM)touzi Wrote: >Last year, Singapore was arguably a richer place than the UK, but growing at a faster rate than China...

How did he come to the conclusion that Singapore was richer than the UK ?

Statistics? Recently I read that Singaporeans had more millionaires than many other developed countries....

(20-03-2011, 03:26 PM)port Wrote:

(20-03-2011, 02:12 PM)d.o.g. Wrote:

port Wrote:i will like to add that the article says with rising wages, increased consumption will follows. it's logical to follow this line of thought n will readily convince a lot of us who r schooled to think logically. in reality, it seldom works in the stock markets.

i made a mistake of buying into a cement firm with operations in sichuan when the sichuan earthquake occurred some yrs ago, thinking it should benefit from an increase in demand from reconstruction of sichuan. china put a price cap on cement prices and my beloved investment in the cement co. is still in the red.

The cement firm sounds like San Teh.

Investors tend to underestimate just how much the Chinese government interferes in the economy. Many prices are manipulated to a very large extent. Investors who bet on macro trends have gotten caught when they bought the supposed beneficiaries, especially when they overpaid thinking the secular growth would bail them out. A short list of sectors that have been or are currently affected include:

Fertilizer (price controls, then export restrictions)
Rare Earths (export restrictions)
Electricity (tariff controls)
Petrol (refiners sell at a loss)
Cooking Oil (price controls)
Pork (direct imports)
Residential Property (unit sizes, cancellation of land auctions, property taxes, and mortgage restrictions)
Banking (reserve ratios, interest rates, lending quotas, consolidation of off-balance sheet lending)

As usual, YMMV.

it's asia cement china listed in hk.

the reason that cement business is not doing well now in Sichuan area is due to price war and overcapacity. Cement business is a high capital intensive with low barriers of entry. As long u have some capital, one could easily set up or buy over a VSK. As for concrete business, it is even worse. Batch plants can cost over 500k to set up. Whether govt is going to intervene or not, one could reasonably expect that the market would be pretty competitive as opportunist jump onto the wagon believing to make a quick buck.

Thus the morale of the story is not so much above how the business is going profit from economic events but to study more on the industry, micro markets demand and supply, business dyanmics and most importantly the management resolve or passion.

(20-03-2011, 11:02 PM)Musicwhiz Wrote:

(20-03-2011, 10:56 PM)touzi Wrote: >Last year, Singapore was arguably a richer place than the UK, but growing at a faster rate than China...

How did he come to the conclusion that Singapore was richer than the UK ?

Statistics? Recently I read that Singaporeans had more millionaires than many other developed countries....

What the surveys (by CapGemini, BCG etc) do say is that Singapore as a country has the highest percentage of rich households & individuals (81,000 millionaires) out of in the world.

Many cities are richer like New York, LA, Chicago etc - and despite all the problems with slowing growth in the US, in all of these places (even Detroit with their troubled car-manufacturing) the rich population grew at double-digit rates.

But these surveys don't say if they distinguish between citizens, PRs, residents, etc - and you can imagine that with Singapore & New York you have the same measurement issues.

http://apps.us.capgemini.com/news/curren...asp?ID=840