China - Economic Data & News 01 (May 08 - Oct 08)

[winston]

From kennynah with thanks:-

11 Jun 2008 12:33 GMT
Soaring imports shrink China's trade surplus, stoke inflation

BEIJING (XFN-ASIA) - Soaring imports caused China's trade surplus to shrink nearly 10 pct as rising global commodity prices stoked inflation in the domestic economy, official figures showed.

China's trade surplus stood at 20.2 bln usd in May, down 9.9 pct from 12 months ago, prompted mainly by a 40-pct spike in imports to 100.3 bln usd, according to customs data.

The steep increase in imports also reflected the rising cost of key commodities purchased by China, rather than necessarily a large increase in physical goods entering the country, analysts argued.

"The impact of prices is huge. Oil prices have roughly doubled from a year ago," Tang Xiaosheng, a Shanghai-based analyst with Guosen Securities, told Agence France-Presse.

However, imports have also expanded due to the need to rebuild parts of southwest China devastated by the May 12 earthquake, analysts said.

"Demand for foreign resources has surged, leading to a larger import bill," Sherman Chan, an economist with Moody's Economy.com, said in a research note.

"Given that the reconstruction work will take an extended period of time to complete, China's appetite for overseas commodities will remain strong in the near term," she said.

((truncated))

[kennynah]

12 Jun 2008 00:17 GMT

CHINA: The Chinese government is considering approval of new financial instruments to help revive sagging stock market prices, the South China Morning Post reported Thursday.

Introduction of stock index futures and margin financing are two idea under consideration, the newspaper said, citing unidentified sources close to China's securities regulatory agency.

The report gave no further details and no timetable for possible approval of the new instruments.

[LenaHuat]

12 Jun 2008 00:17 GMT
CHINA: The Chinese government is considering approval of
new financial instruments to help revive sagging stock market
prices, the South China Morning Post reported Thursday.
Introduction of stock index futures and margin financing are two
idea under consideration, the newspaper said, citing unidentified
sources close to China's securities regulatory agency.
The report gave no further details and no timetable for possible
approval of the new instruments.

These measures to beef up things are unlikely to work. The Chinese A investor is oredi scared stiff liao. Psychologically, 'bouncebackability' is at ground sediment - oops sentiment - oh no, it's really at sediment level. When I wake up on the wrong side of the bed, I need to mouth mumbo jumbo so as to beat the nightmares out of my brain.

[winston]

Foreigners can invest in the A shares thru QFII only. There a quota on the QFII. Now that the A shares have dropped, they are increasing that quota.

=========================================

Beijing resumes awarding QFII quotas without fanfare
Thursday, June 12, 2008

China has quietly given permission since March to six foreign fund managers to invest up to US$675 million (HK$5.26 billion) in the country's securities market, official sources said yesterday.

Beijing resumed issuing quotas under the qualified foreign institutional investors scheme three months ago. It had halted approvals in February 2007.

The sources said six investors had received new quotas, including Norway's Government Pension Fund and AMP Capital Investors.

As at May 30, the China Securities Regulatory Commission had approved QFII quotas totaling US$10.57 billion for 56 foreign firms. REUTERS

[kennynah]

12 Jun 2008 01:47 GMT
China Jan-May actual FDI 42.778 bln usd, up 54.97 pct - commerce ministry

BEIJING (XFN-ASIA) - Actual foreign direct investment (FDI) inflows into China in the first five months of the year totaled 42.778 bln usd, up 54.97 pct from a year earlier, the commerce ministry said.

In May, FDI stood at 7.761 bln usd, up 37.94 pct year-on-year.

The ministry said there were 11,915 new foreign-funded enterprises in the first five months of 2008, down 20.95 pct from a year earlier, with 2,425 new foreign-funded enterprises in May, down 10.94 pct.

In the first five months, new US-funded companies fell 28.13 pct from a year earlier, although invested capital increased 25.09 pct, the ministry said.

Meanwhile, new EU-funded companies fell 24.85 pct from a year earlier with invested capital increased 35.2 pct year-on-year.

Hong Kong, the British Virgin Islands and Singapore were the top three sources of FDI in the first five months of the year.

[kennynah]

12 Jun 2008 02:10 GMT

BULLET: CHINA: May CPI slowed to 7.7% y/y from April's 8.5%..

CHINA: May CPI slowed to 7.7% y/y from April's 8.5% as the result of slower food price increases. Overall food prices decelerated to 19.9% from 22.1% in April, due in large part to a sharp deceleration in meat and poultry prices to 37.8% from 47.9%.

Non-food prices also decelerated to 1.7% y/y from 1.8% in April. Month-on-month, May CPI fell 0.4% after a 0.1% rise in April.

Still, year-to-date CPI stood at 8.1%, down only slightly from 8.2% in April and still well above the government's 4.8% CPI target for this year.

[kennynah]

12 Jun 2008 02:12 GMT

CHINA: The PBOC sold 9 billion yuan in 3-month and 3-year sterilization paper today at unchanged yields, as expected.

The lower volume at the regular Thursday open market operations was due to the full percentage point rise in the reserve requirement announced by the central bank on Saturday, which will drain about 420 bln yuan from the banking system by the end of the month.

[millionairemind]

Still watching the A50ChinaTracker 2823 that it listed in HK. The A shares have now dropped about 52%..

Good Morning, Winston - Horrors. The Chinese investors must be ashen-faced.

L - I read a couple of months ago that some Chinese Fund Mgrs are seeing a true real living and breathing bear market for the first time in their careers (which is actually short, around 2-3 years). They are so used to mkt going up... don't know what to do when mkt is going down cos' I don't think they allow short selling in China.

Well, all good parties must come to an end I guess. I just hope that the ordinary folks, farmers who bet their life savings in the stock mkt thinking it is a "get rich quick" jack pot don't get burnt too badly. Sigh....

Like what JL said below -

The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.

There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.

Sigh... those who think mtk is a very easy way to make money always go back disappointed. It is simple (like say BUY LOW, SELL HIGH, or BUY HIGH, SELL HIGHER), but not easy. I feel sorry for the little guys... Sigh...

[millionairemind]

May inflation down as jump in food prices eases

Producers hold back from passing on higher energy and raw material costs

(BEIJING) Chinese annual inflation fell in May to 7.7 per cent, bucking a global trend, as a year-long surge in food prices ebbed and producers held back from passing on sharply higher energy and raw material costs.

The drop will provide some relief to policymakers who have declared high inflation their main economic challenge, but economists ruled out a softening of the central bank's tight policy after it published strong money supply data for May.

Within the consumer price index (CPI), food inflation eased to 19.9 per cent in the year to May from April's 22.1 per cent pace, the National Bureau of Statistics said.

Non-food inflation nudged down to 1.7 per cent from 1.8 per cent even though figures on Wednesday showed factory gate prices rose at the fastest rate since late 2004.

'CPI inflation should continue to slow through the rest of the year, because pork prices have peaked, because China is not suffering from a rice shortage, because energy will remain highly subsidised, and because overcapacity limits the ability of most manufacturers to pass on higher raw material costs,' said Andy Rothman, an economist at CLSA in Shanghai, in a note to clients.

The CPI reading confirmed a leak to Reuters on Tuesday and was below forecasts of a 7.9 per cent rise.

Beijing is not alone in its struggle with inflation. From Europe to the Middle East and across much of Asia, governments are fighting to tame the fastest price increases in years.

China provides most of its own food, which makes up a third of the consumer price basket, so as it recovers from a series of domestic farming setbacks, it has largely been able to insulate Chinese families from fast-climbing global food prices.

But rapid industrialisation means China is less able to escape the impact of rising raw material prices, and, unlike Mr Rothman, some economists fear pipeline pressure evident in the producer price index will eventually carry through to consumers.

'The concern is that record factory-gate prices will pass through to consumer prices. So I think the decline in CPI in coming months will be slow and gradual,' said Shi Lei, chief economist at Tianxiang Investment Consulting in Beijing.

The fall was not enough to soothe the Shanghai bourse, which fell 2.21 per cent to a 14-month closing low.

Some economists trace inflation not to high commodity prices but to loose monetary policy as the central bank struggles to mop up cash pouring into China from its huge trade surplus.

Annual growth in the broad M2 measure of money supply jumped to 18.1 per cent in May, much faster than expected, from 16.9 per cent in April, the People's Bank of China said yesterday. -- Reuters

[winston]

Stats of the week: 21.6%; Estimated increase in Chinese retail sales in May, from one year ago.

Automobile sales rose 32% from one year ago.

Winston's comments: Economic stats are lagging indicators though. However, I have yet to see any slowdown in consumer spending yet. The malls are still busy and my Chinese friends are still spending.

The 54% drop in the stockmarket may hurt things as well as the jump in steel prices and other commodities..

The safer bet is to invest in small ticket consumption plays eg. low end food chain, rather than big ticket manufacturers like property developers ..