China, Shaken But Not Stirred
This post was written a week ago for www.hnworth.com, a site targeting high net worth individuals in Singapore.
Have fun reading…
Reading through a report on China with great alacrity and struck by the strategist’s observation that the closer he got to China, the less concerned investors were about the possibility of a hard landing for the place. Cynics would probably jump on this with the wry comment that perhaps it has to be with the arrests we saw recently where all skeptics were rounded up if they as much utter a word against the state of the economy, and not to mention, the bells of alarm that have been sounded over the years over those economic data reported.
What do we have when we run of things to say ? When a country’s stock market rallies 60% in 6 months to collapse 45% in the next 2 for the government to step in with all manners of intervention such as the banning short selling, forced buying, arrests and 6 rate cuts ?
What can we say when the country is still on course for an above 6% growth which is not enough for her critics who come from economies running on zero interest rates and disinflationary markets ?
Months back, we pointed out about the monkey-trading stock market in China and the monkeys are back ! After the 5th plenum of the Communist Party’s Central Committee, China looks promisingly ripe again with a revised growth projection of 6.5% for the next 5 years and a 2 child policy ! The monkeys flew into action on Friday, chasing up those “baby related” stocks as far as the imagination would fly, leaving latex birth control manufacturers like poor Okamoto Industries (5122 JT) the logical 10% losers in a single day.
For “baby stocks”, we had the following rallies, just to name a few, and it seems that the Chinese like Japanese diapers and dislike their condoms.
- Pigeon Corp (7956 JT) – baby care, maternity and elder care goods. +10.7%
- Unicharm Corp (8113 JT) – sanitary, hygiene and infant care products. +3.59%
- China Mengniu Dairy Co (2319 HK) – dairy products. +3.43%
- Biostime International (1112 HK) – pediatric nutrition and baby care products. +5.11%
- China Child Care Corp (1259 HK) – designs and provides range of children care products. +40%
- Kao Corp (4452 JT) – manufacturer of household and chemical products. +3.86%
- Yamaha Corp (7951 JT) – manufactures musical instruments, audio and golf equipment. +2.72%
One would be even more amused by the equity market reactions on Tuesday when a US Navy destroyer sailed within 12 nautical miles of one of the Chinese artificial islands in the South China Sea.
Sharp spikes in the prices of defence company stocks were noted during the day for Hong Kong listed Avichina Industry (2357 HK), mainland stocks in Avic Aviation (600893 CH), Avic Helicopter (600038 CH), China Aerospace Times (600879 CH) and more.
On a flight of fancy, it brings to mind Casino Royale, where the famous Bond martini was conceived, it being the first book of the series, to be shaken and not stirred. And Chinese markets have been shaken to no small degree but has bounced back, quite naturally, breaking out of its weekly downtrend channel.