All The Latest Chinese News In Just 7 Bullets
By Tyler Durden
As Evercore ISI (correctly) puts it, “no one can remember more than 7 bullets on anything.” So for those eager to catch up on all the latest news out of China, here are just 7 bullet points:
- Incoming Jan-Feb data still choppy. Our view; no immediate hard landing, but no economic takeoff either. Data review below.
- Our Synthetic Growth Index (SGI) likely down for Jan and Feb, after up Sep-Dec. Looking overseas and in China, we see more downside risk than upside surprise.
- As China slows, no problem is too small for a new policy fix. Here, four key items the NPC addressed. Sadly, Beijing’s actions all look like patches, not like fixes.
- Housing: too many vacant units, in the wrong places, wrong size and wrong price. Some cities big speculation, others still dead. SOEs buying doesn’t help.
- SOEs: excess capacity, old, inefficient in most key China industries. How to fix? Who would hire a 30-year veteran steel worker?
- Equities: recent rally welcome but markets still broken just when more equity financing is needed. Beijing focus – just avoiding a new price collapse.
- NPLs: from past bad decisions, rising sharply. NPLs converted into ABS won’t help much. NPLs converted into equities, even less. No winners here.
Curious for more: here are the details:
Overview. The last two weeks of NPC announcements and positive talk just don’t fit with what we see. Jan and Fed data are not sparkling. We still pick up mostly negative anecdotes. Our Jan and Feb SGI likely will be lower.
Beijing has been on the protect growth track for a year. But the rest of the world is not cooperating. Global growth numbers are not improving. Every added monetary easing move (real or promised) in the developed world makes us more nervous, not more comfortable.
China has big structural problems that are weighing it down. The understandable reaction is another Beijing fix. Every governmental minister got a hearing at the NPC – conditions, prospects, policy ideas – plus the obligatory cheerleading – this will happen; that bad won’t happen.’ It’s the next steps that leave us cold.
Here, briefly, four big problem areas that Beijing is trying to address. (Note. Ask us for more detail).
First problem, Housing. Housing is just out of equilibrium. Too many units have been built (in order to create demand and jobs), in the wrong places and available at too-high prices. There is renewed speculation in Tier 1 cities. Some buyers borrow to borrow — borrowing money for the down payment, in order to get a mortgage. …read more
Source: All The Latest Chinese News In Just 7 Bullets
