WORLD ECONOMIC FORUM, 24 Jan 2015

JACK MA SAYS HE WAS REJECTED BY HARVARD 10 TIMES

Who applies 10 times ???

Someone who Rejects Rejection ? A trader at heart ? Someone who thrives on the illogical ? Challenging the norm ?

There are so many mixed signals now out of China that I would be looking to India if I were an investor, even as the SHCOMP Index approaches its historic high.

Can Slowdown in China Benefit Indian Equity Markets ? Yes, Says Experts. http://articles.economictimes.indiatimes.com/2015-01-20/news/58267827_1_other-emerging-markets-gdp-growth-chinese-markets

Roubini Global : India To Be Key Beneficiary of Euro ECB http://www.moneycontrol.com/news/asian-markets/india-to-bekey-beneficiaryeuro-ecb-roubini-global_1282114.html

This is because we have new developments daily out of that place akin to an active volcano that rumbles and spurts, spewing good and bad news simultaneously that will boggle even the most astute mind.

To trade China, just play dumb, close your eyes and pick a card.

This week :

• Worst GDP in 24 years seen as the “new normal”
• Biggest fiscal challenge since 1981
• PBOC has no intention to provide too much liquidity : PBOC ZHOU
• E-commerce transactions hit US$2 trillion in 2014
• 70% of surveyed satisfied with progress of China’s anti-graft campaign
• New series of stress tests on banks
• Regulators curb new margin accounts
• Copper demand to surge in 2015 but Aluminum imports shrink to lowest in 7 years
• Iron ore imports jumped 13.9% to record in 2014 but steel output seen weakening to slowest growth rate since 1981
• PBOC Zhou willing to sacrifice economic growth for greater long-term stability risking US$ 1.1 trillion of projects
• Government workers wages rise at least 31%
• Non performing loans up the most in a decade to 1.29% and is estimated to rise to 1.6% this year as economic growth weakens and provision coverage ratio at banks rose 230.5% last year

And the list goes on to banning of smoking bacon, poisonous milk being dumped into fields, the shuttering of a FAKE bank, more online censorship and the best one is rumours of another rate cut (that was due this month) next month.

On the credit front, good news as the Shenzhen government seeks buyers for stakes in Kaisa that is not “at a discount” suggesting possibly arm twisting which makes Kaisa bonds a buy, especially the onshore CNY ones as some credit desks suggest a fair value of 50cts at least.

Bonds are back in focus on hopes of rate cuts and stimulus and stronger equities. CNH and CNY papers doing better than USD debt.

I am not sure about the future but I think I will not be too bullish going ahead as the CNH-CNY spread gapped wider again in a sign of investor unease.

I do not see much more upside left but then again, in the magical land of AliBaba, anything can happen.

Leaving with the indicative bond prices.