2009-03-31

Spreadtrum Popped

I mentioned Spreadtrum (SPRD) stock back in January, when it was trading for just under $1.00 per share. I was watching it because it has over $1 per share in cash. Last Thursday, March 26, Samsung selected the company as a chipset provider for mobile phones. It's good news because the company's future customer base was in doubt.

Shares jumped from $0.95 on Thursday to $1.79 on Friday, but shares fell to $1.50 today. I entered into a half position in my China Fund, the positon is up about 37% from the $1.09 entry. Not great relative to other chip stocks, but not bad relative to the overall market.

Excellent Interview with Jim Rogers



Not a lot of new information here, but he fleshes out a few of his arguments.

2009-03-22

谢国忠:要改革,流动性不是出路 - Andy Xie: Reform, Not Liquidity, Is the Way Out

I have longed believed that this is a great idea for China. It closes the wealth gap, enshrines market reforms with the populace, and could have positive effects on corporate governance. Here's Mr. Xie:
To solve the demand weakness, China must boost household demand to offset export weakness and decrease property costs to clear the existing inventory. China’s economy cannot resume high growth without both issues addressed. Confidence is not the main reason for the relative weakness of China’s household demand – low household income and wealth are. The quickest solution is to distribute the shares of listed state-owned enterprises the government holds and give them to individual citizens. This will have a powerful short-term effect on consumption. As business profits improve in a booming economy, the shares will appreciate, which will support household demand and make the boom last.

In 1998, the government sold public housing flats to their tenants at notional prices, which laid the foundation for the housing boom afterwards. If China distributes the publicly held shares to the housing sector, it could ensure another decade of economic prosperity.
Later, discussing the property market, he says:
Some hope liquidity would improve the economy through inflating asset markets, i.e., creating another bubble. This is what Greenspan achieved after the tech burst in 2000. Of course, his glory then has become today’s nightmare. Creating another bubble is irresponsible even if it can be done, and I doubt that it can be done in China today. Some of the liquidity did flow into the stock market in December 2008 and January 2009. At its recent peak the stock market rose by 40 percent in three months. But it is extremely hard to manufacture a stock market bubble in a difficult economy. I cannot recall one in modern history. The reason is that speculators are quicker to take profits in a poor economy than in a booming economy.

Further, it is virtually impossible to inflate China’s property market by encouraging speculation, i.e., making funding easier to get and interest rate low. The current inventory is unprecedented by any measure. This is probably the biggest overhang per capita of physical properties completed or under construction in modern history. It would take three years to digest under the best policy combination. Re-inflating the bubble with liquidity is just a pipe dream.

China’s problem is weak household demand. The reasons are low household income and wealth. Confidence is an issue but not the most important one. Strong exports in the past decade supported China’s massive investment. Now we urgently need household demand to replace exports to make the investment profitable. The quickest solution is to redistribute government wealth to the people. Focusing on liquidity only delays the solution and prolongs the hard economic time.
Substitute China for America, the same advice applies.
Reform, Not Liquidity, Is the Way Out

为了解决需求疲软问题,中国政府必须刺激居民消费,以抵销出口下滑带来的影响;降低房地产购买成本,以消化眼下的存量房屋。这两个问题不解决,中国经济便不能重现高速增长。信心并不是中国家庭消费相对疲软的原因,事实上,收入低、财富积累少,才是真正的肇因。最迅速的解决办法是,政府将持有的上市国企股份分配给民众。这对消费而言,必将产生一个强大的短期效应。随着经济高速发展推动企业经营利润提高、股票增值,消费者的有效需求将进一步得到支撑,带动经济持续繁荣发展。

1998年,中国政府将公有住宅以象征性的低价出售给个人,启动了住房制度的改革,为后来房地产市场的繁荣奠定了基础。如果政府将国企的股份分配给家庭部门,将确保新一轮的十年经济增长。
以后:
部分人士希望,扩张流动性能够抬升资产市场价格,进而改善经济,这实际上相当于制造一个新的泡沫。在2000年高科技泡沫破裂后,格林斯潘采用的就是这种做法。时过境迁,格氏昔日的光辉开始成为今日的梦魇。制造新泡沫以应对旧泡沫破裂的后果,是不负责任的行为,即便可以为,也不应为之。

我担心这一悲剧在中国重演。在2008年12月和2009年1月,确实有部分资金流入了股市,在三个月内,股市出现了40%的反弹,创下近期高位。不过,要想在经济衰退时期吹出一个股市泡沫,实在是极其困难,现代历史上还不曾有过,因为投机者此时通常选择快速获利了结。

此外,试图通过投机来推升中国房地产市场价格的做法,也只不过是一个“白日梦”。当前在建的以及完工的房屋,是有史以来数量最多的,即便是借助最佳的政策组合,也需要三年的时间来消化。

中国的经济问题在于疲软的居民需求,其根源在于民众收入低、财富积累少。信心虽然是一个影响因素,但并不是最重要的因素。过去十年,强劲的出口支撑了中国的高额投资。如今,我们迫切希望居民需求可以取代出口,令投资获益。最快的解决办法,是将政府财富分配给公众。寄望于流动性政策,只会延误对经济危机的应对,延长经济衰退。
美国和中国的问题差不多。
谢国忠:要改革,流动性不是出路

It was legal

I did not see President Obama's interview with Jay Leno, but it turns out Obama said something that he ought to repeat in an address to the American public. What follows is from Elliot Wave International:
Jay Leno described the immense dollar amounts of executive bonuses, and said
"I know what would make me feel better -- shouldn't somebody go to jail?"
At this the audience clapped and cheered loudly. In turn the President indicated that he understands the sentiment, but gave this reply:
"Here's the dirty little secret -- most of the stuff that got us into trouble was perfectly legal."
Talk about a truth that nobody wants to hear.

Read the rest of the post to learn why this could mean bad news.

2009-03-20

Mr. Practical: Mini Hyper-Inflation?

Good stuff.
$300 billion vs. the Treasury’s funding needs of a minimum of $1.5 trillion is only decreasing the amount of liquidity withdrawal by those needs. It’s not at all the case that the Fed is hyperinflating - to say nothing of these Fed purchases being, of course, a drop in the bucket to the trillions that have been and are in the process of being wiped out.

2009-03-19

Dollar Crisis in the Making

Here's a recent three-part series by W Joseph Stroupe on Asia Times. It's a great round-up of China's position relative to the U.S. dollar, and reaches the conclusion that China may have $450 billion in assets "hidden" from official statistics, and will use these dollars to make resource purchases all around the globe. He posits that China's near-term goal is to reduce U.S. dollars to 50% of reserves so that it is inoculated from changes in exchange rates. Read the whole article, as it gives plenty of background and supporting evidence.
Part 1: Before the stampede
Part 2: The not-so-safe haven
Part 3: China inoculates itself against dollar collapse

Gold & Energy Performing Well After Fed Announcement

My Best of Funds portfolio had been in a funk for about three weeks, as I covered my shorts a bit early and didn't go long the market, sticking mainly with cash, precious metals, and miners. However, yesterday's move, and today's if things hold through the close, lifted the fund to a new all-time high. The $70 swing in gold, from yesterday's lows to today's highs, was the main catalyst, while higher oil prices helped. One stock I'd added recently was Hercules Offshore (HERO), up more than 20% today and over 40% in the fund. I can't really thank Ben Bernanke for the move, even though he's responsible. I'd prefer to invest in positive growth stories, rather than the destruction of the U.S. dollar—but I also prefer high probability trades to low probability ones.

I was checking to see how the Hong Kong and Chinese listed shares on my watch list were doing. On the Mainland, the notable mover was Shanghai Zhenhua Port Machinery <上海振华港口机械>(600320.SS), which gained just under the 10% limit.

A big mover on the Nasdaq was General Steel Holdings (GSI), up 12.8% yesterday and on pace for another 14% today.

In Hong Kong, Lingbao Gold <灵宝黄金> (3330.HK) climbed 15% and Mongolia Energy <蒙古能源> (0276.HK) advanced 20.9%.

Newsworthy (article links in English): ZTE reported 2008 full year earnings. <中兴通讯>(0763.HK, 000063.SZ)
Forbes also has an article on ZTE's push into the American smart phone market.

Tencent reported 2008 full year earnings. <腾讯> (0700.HK)

Li Ning reported 2008 earnings. 中文 <李宁> (2331.HK)

2009-03-18

2009-03-06

Andy Xie's Latest

A Decade to Lose The most relevant part on developing economies:
The problem with the model today is that it is crowded. Developing economies are already 30 percent of the global economy at current price and nearly half on a purchasing power basis. The export model cannot thrive for shortage of customers. Developing countries have to trade more with each other and develop domestic demand. But this would require painful reforms to their political economies. The key is property rights and income distribution. The two must go hand in hand. Lack of domestic demand tends to result from income concentration, which is due to uneven playing field in opportunities. Many developing countries, like South American and Southeast Asian countries, have stagnated in the past decade due to their inability to reform their political economies.

全球亦将失去十年?
今天,这一模式遇到的挑战是采用它的国家太多了。以当前的价格计算,发展中国家占据了全球经济的30%;以购买力平价计算,占据了全球经济的近半壁江山。在缺乏消费者的情况下,这一模式难以延续既往的畅行无阻。发展中国家必须更多地开展彼此间的贸易往来,挖掘国内需求。这要求它们不得不对本国的政治经济体系实施痛苦的改革,改革的核心在于产权制度和收入分配制度,二者必须相辅相成。过去十年来,南美洲和东南亚等发展中国家的经济停滞不前,根源就在于它们无力改变自身的政治经济模式。

谢国忠:世界经济已处于硬着陆阶段

财经网

2009-03-03

占·羅傑斯 — 美国政府“摧毁纽约作为金融中心“

占·羅傑斯告诉了CNBC Asia's Martin Soong:
“你正在看的东西在我们眼前,非常从历史上看,它基本上摧毁纽约作为金融中心和破坏美国作为世界上最强大的国家 ” (Google翻译)
英文视频

还有两个跟Hugh Hendry 的采访:
美国国际集团已经死了
关于定量宽松
我想在今年年底前将表明,量化宽松不会成功的一种环境,使他们在美国的债务相当于全球国内生产总值。你怎么能诱使人们采取更加债务?(Google翻译)

Reform Continues to Progress

人民币贸易结算试点“积极推进中”

The link is to the Chinese article, below is the English summary.
Foreign Trade to Be Settled in Yuan

The state forex watchdog SAFE said that preparations for a pilot project that will use the yuan to settle foreign trades are rapidly underway.

The launch date for the pilot has not yet been decided, a SAFE executive told Caijing.

This initiative is an important step in internationalizing the RMB and allowing it to be traded freely.