China Economic News

[specuvestor]

Just wanted to highlight this weird phenomenon cause maybe STI stocks generally gives high dividend

from 30 Dec 2016 to 17 Dec 2024 STI up 32.0% but total return it's actually up 83.4%

..
The summary is long term real earnings growth falls behind long term GDP growth in many countries.

Intuitively, that seems true. Another example would be Singapore GDP vs STI. Since 2007 we have more than doubled our GDP, but STI has yet to exceed it's 2007 highs. 

Rigorously, identifying a trend like increasing GDP is important, but still inadequate in formulating a complete investment thesis.

[Wildreamz]

Just wanted to highlight this weird phenomenon cause maybe STI stocks generally gives high dividend

from 30 Dec 2016 to 17 Dec 2024 STI up 32.0% but total return it's actually up 83.4%

..
The summary is long term real earnings growth falls behind long term GDP growth in many countries.

Intuitively, that seems true. Another example would be Singapore GDP vs STI. Since 2007 we have more than doubled our GDP, but STI has yet to exceed it's 2007 highs. 

Rigorously, identifying a trend like increasing GDP is important, but still inadequate in formulating a complete investment thesis.

December 2016 happens to be a cyclical low (where most investors were still in the red for about a decade) and December 2024 happens to be a cyclical high. To assess strength of long term correlation between GDP and stock market performance (as per original context of the statement). Would it make more sense to look at longer term correlations (e.g., 10, 20, 30 years)?

[specuvestor]

Incidentally my thoughts on GDP vs stock market is here:
https://www.valuebuddies.com/thread-5133...#pid172436

Just wanted to highlight this weird phenomenon cause maybe STI stocks generally gives high dividend

from 30 Dec 2016 to 17 Dec 2024 STI up 32.0% but total return it's actually up 83.4%

..
The summary is long term real earnings growth falls behind long term GDP growth in many countries.

Intuitively, that seems true. Another example would be Singapore GDP vs STI. Since 2007 we have more than doubled our GDP, but STI has yet to exceed it's 2007 highs. 

Rigorously, identifying a trend like increasing GDP is important, but still inadequate in formulating a complete investment thesis.

December 2016 happens to be a cyclical low (where most investors were still in the red for about a decade) and December 2024 happens to be a cyclical high. To assess strength of long term correlation between GDP and stock market performance (as per original context of the statement). Would it make more sense to look at longer term correlations (e.g., 10, 20, 30 years)?

[weijian]

When we look at a small country like Spore, its GDP forecast starts with a range at the start of the year and gets revised to a different (and tighter) range over the next few quarters. But a huge country like China is able to hit its annual target with precision. I reckon they may have hired some Jack Welch era GE financial engineers to hit their target (and not forecast).

On another note, China's national home prices have probably dropped for 3 years and still going. When we look back at the last huge housing crash - the 2008 US subprime crisis, the US housing market started dropping in 2006 and only bottomed in 2011 - a 5-6 years gap. And if we look further back to the Japs in the late 1980s - they have had deflation for 30 years? The US/Jap markets were busted by Mr Market, while the Chinese market was busted by their own Regulator. I would presume that the Chinese are more than capable to learn from history, since for a start, they already have 3000years of history to learn from.

China’s economy grew 5% in 2024, surpasses forecasts on stimulus push

For the full-year 2024, the world’s second-largest economy grew 5.0 per cent, data from the National Bureau of Statistics data showed on Friday, meeting the government’s annual growth target of around 5 per cent. Analysts had forecast 4.9 per cent growth.

The economy grew 5.4 per cent in the fourth quarter from a year earlier, significantly beating analysts’ expectations and marking the quickest since the second quarter of 2023.

https://www.businesstimes.com.sg/interna...mulus-push

[weijian]

I try to take cues from the last major economy real estate crisis - which was the US subprime crisis that eventually crashed many financial institutions (subprime originators, banks who took on principal risks and insurers who took on insolvency risks). US country-wide prices took ~6years (from 2006 to 2011) to hit bottom. But since equity markets are forward looking, the bottom roughly came when authorities took out the bazooka and then bailed out many of the systemically important financial institutions.

Luckily for China's current real estate crisis, there is already a precedent and template to follow. In general, the merger of a sector's top companies will roughly signal the bottom of the sector downturn. For real estate crisis, would bailouts by the authorities signal that the end is nearer than ever? Or would folks tend to suspect that China real estate crisis had inflated so much that it will follow Japan's deflation pattern of the 1990s than the US's GFC2008?

Rare China support shows Vanke may be too big to fail

Lifeline signals Beijing is willing to take more steps to halt a housing slump that’s now in its fourth year

Shenzhen, Guangdong province and China’s related departments will “pay high attention” to Vanke and will support its stable operation, reported the Nanfang Daily, a media outlet run by the Communist Party in the southern Guangdong province. The parties will “protect the rights of homebuyers, creditors and investors”.

“Vanke is the first developer to see direct state intervention, it’s almost like a bailout,” said Raymond Cheng, head of China property research at CGS International Securities Hong Kong.

“As an iconic developer, a downfall of Vanke would deal a huge blow to home market confidence,” Cheng at CGS said. “It’d also be a ‘slap in the face’ after policymakers vowed to stem the decline in the home market nationwide a short while ago.” BLOOMBERG

https://www.businesstimes.com.sg/propert...o-big-fail