CHINA FOCUS : WALKING CABBAGES, LEAVE ME ALONE, LEST IT COMES BACK TO BITE YOU
We have the lowest weekly close for the SHCOMP since March, scores of Chinese tourists wounded in the Bangkok bombings and CNH settling down in a new trading range this week and what have we learnt ?
Markets can stay irrational longer than you remain solvent ? Yawn.
For me, I learnt that it is a bit like walking cabbages – nothing, and prepare to be unprepared. Because as Patrick Chovanec surmised on Twitter, “More and more people convinced China is facing an economic crisis, but disagree widely on what the implications are.”
Yes, there was all that hype last year about Chinese kids walking cabbages out of boredom that was widely reported in Western media when it transpired that it was a hoax and the work of a single performance artist that managed to catch on with the public and became a big fad.
Now, if people can walk cabbages in China because it is fashionable then I would say, anything goes (note that cabbage must be mounted on wheels) and I refuse to read anymore China-is-so-dead stories because they are just rehashing what we have said 4 months ago and our dear writer, Bernie who is moving to Washington, summarised it well from his bird’s eye view at the IGO/NGO level.
“What China need is probably for targets not to serve as the constitution, but for targets to serve as a living constitution. In other words, it had to be adhered to, but not to the point of distorting the truth as in Stalin’s case. Even though China has no elections, Chinese rulers needs to defend it’s mandate from heaven. The ‘science of delivery’ is all about targets, but it treats target more like a living constitution than a constitution cast in stone. Mastering the ‘science of delivery’ would probably be a way for the Chinese bureaucracy to survive in the coming 5-year-drought in growth.“https://tradehaven.net/ad-hoc-commentary-china-will-slowdown-from-2016-to-2020/
Too “cheem” ? Then imagine walking cabbages.
” ‘I was only trying to encourage freedom, and to get people to question their daily activities. There’s a knot in everyone’s head, and I want to untie that knot. A lot of people come up to me asking what I’m trying to accomplish, but when I’m walking my cabbage, I don’t want to talk. Just doing what I’m doing is enough.'” http://www.dailymail.co.uk/news/article-2625382/Performance-art-exhibit-Chinese-teens-walking-Beijing-heads-cabbage-leash.html#ixzz3jSVOh5N2
Criticism from political fronts now.
But we have the IMF and rating agencies heaping on the praise for the new exchange rate regime.
What I think ?
Leave ’em alone !
Everyone has made China their business in the past decade. The market saying for the past 5 years has been “Beijing sneezes and the world catches a cold.”
My conspiracy theory from last month.
“I think the best thing to do to slam dunk all the pessimism would be for the global stock markets to correct down 20% and for China to remain stable throughout the time and good faith will return once again ?” https://tradehaven.net/china-focus-dont-get-mad-get-even/
Equity vols are falling at last.
The currency is has stabilised for the week, unchanged, even as the rest of the region from Malaysia to Philippines sees turmoil in their Fx regimes.
The labour unrest movements are spreading across the country, if NY Times is anything to go by.
“Labor unrest in China has increased as the country’s economy has faltered, especially in the provinces that produce goods for export. One focus now is on unpaid wages, a sign of struggling businesses in a troubled economy. Previous labor actions were largely about pay increases, reflecting a strong job market.” http://www.nytimes.com/2015/08/18/business/international/chinas-devaluation-of-its-currency-was-a-call-to-action.html?smid=tw-nytimesbusiness&smtyp=cur&_r=0
And the wealthiest are bailing out in large numbers as the “poor” are left holdings onto stocks.
I would not worry about all that because China is just too big to fail or ignore but the rest are not.
Contagion has just started and China has just passed the baton to the Fed for their FOMC next month. Let’s leave them alone and worry about ourselves before all that criticism comes back to take a bite out of us.
Leaving with the indicative prices.