China In Focus : China In Your Hand


Don’t push too far
Your dreams are china in your hand
Don’t wish too hard
Because they may come true
And you can’t help them
You don’t know what you might
Have set upon yourself
China in your hand

China rules !

According to a PB poll at a conference last week in HK.

Most undervalued asset – CHINESE BANKS
Currency that will preserve wealth and store value  best in the next 10 years – CNY
Equity market that will perform best in the next 12 months – CHINA

This week has been about the PBOC cash injection of US 81 bio into the 5 major state-owned banks (ICBC, ABC, CCB, BOC and BComm) which the market interpreted as stimulus. However Ambrose Pritchard pointed out that it could just be a run of the mill short term operation to smooth liquidity ahead of the upcoming Golden week holiday on 1 – 7 Oct.

The result is that onshore bonds had their biggest weekly gain of the year.

The second big event has been the Alibaba ipo, the largest ever globally, which has highlighted to us growing Chinese domination of the tech sector. Alibaba has rocketed to the 17th largest market cap stock in the world overnight, challenging China Mobile to be the largest Chinese firm.

The 3rd piece of news I found interesting has been China poosible plans to boost their gold reserves.

PBOC chief Zhou announced on Thursday that Shanghai will form its own gold benchmark.

Thus we had the USDCNY enjoy a momentary spike earlier in the week to 6.17 which was a divine selling opportunity and we are back to targeting 6.13 again.


Whilst China’s phenomenal growth story is not making a U-turn, things are slowing onshore as cement production and electricity usage plunges. And China is continues to make their mark overseas these days, still concentrating on onshore reforms as another global manhunt nets 88 suspects from abroad for economic crimes.

And another prominent arrest is made this week with the President of China Resources Power hauled up on charges of corruption.

Globally, we have had 5 cases of chief executives of Chinese companies, some listed, go missing in the past 3 months.

It should not detract us from the fact that the bonds, the currency and Chinese equities continue to look good, although I am not so sure about real estate. The Shanghai-HK connect is set to launch in Oct which will be a boost for the stock market and Alibaba has made many many people rich, adding another 200 bio to global wealth numbers.

The dream is really China in our hands.


Part 2