Sunday, 02 August 2015 00:00

July home prices continue to recover

Home price survey data released over the weekend showed a continuing rebound in new home prices across China, with top-tier markets in Beijing, Shanghai, Shenzhen, and Guangzhou improving significantly more than others. The average price for a new home rose to 10,685 RMB per square meter, up +0.5% from last month and narrowing the YoY price differential to -1.4%, recovering from the -4.5% YoY gap for April 2015. This month’s pace of recovery nearly matched last month’s +0.6% MoM rise, leading to the conclusion that recent positive data is more than just a short-term phenomenon, and that the nascent recovery…
The official manufacturing PMI for July 2015 came in at 50, a 5-month low, revealing expectations for zero growth in China’s manufacturing sector. The data, released by the National Bureau of Statistics, was slightly lower than expectations of a marginally-growing 50.1, and was again at odds with private survey data released earlier in the month which showed outright contraction. China’s manufacturing sector, which has historically contributed approximately one third of overall economic output, is clearly a key industry influencing the country’s growth prospects. Although the Caixin/Markit survey and official readings may differ (the former well into the contraction zone, the…
Sunday, 26 July 2015 00:00

Week in review – Jul 24, 2015

Last week’s trading in US-listed China stocks brought more losses, with the PowerShares Golden Dragon China ETF losing just over -1%, nearly reversing gains from the previous week. The Shanghai Composite added +2.9%, the third consecutive weekly gain since the domestic Chinese shares plunged over -30% from mid-June through the first week in July before policymakers intervened to halt the rout. Stocks in Hong Kong were also lower, dropping about -1%. Themes influencing trade during the week included some eco data (flash manufacturing PMI), and there were a slew of earnings releases in the US which also included some color…
The headline reading for the July 2015 Flash China Manufacturing PMI was 48.2, falling sharply from 49.4 in June, and matching lows last seen in April 2014. This month’s data was the fifth consecutive month where the index was signaling contraction, and continuing weakness in some key indexes suggested sustained headwinds. The production index led the charge lower, picking up the pace from June, and extended a five-month slide of lower readings, suggesting that activity levels remain weak. Both new orders and new export orders crossed into contraction territory vs. signaling expansion last month, with one conclusion being that the…
News that apparel retailer Uniqlo plans to close its flagship store on JD.com (JD) came just a few short months after the initial announcement in early April. When the deal was first revealed, it clearly held high expectations for both firms. JD noted that Uniqlo was the first international retailer to use its warehousing services, validating its marketplace offering as ready for “prime time”. Uniqlo offered special discounts to JD.com customers and exclusive merchandise to promote the new channel, while emphasizing China as one of its most important overseas markets. News that the company has decided to close its flagship…
Official home price data released over the weekend confirmed the reading from private survey results published earlier in the month: that the housing market in China continues to recover. On average, new home prices rose +0.2% during June, bringing the YoY change to -5.4%, and the average price for an existing home rose +0.3% MoM, narrowing the YoY change to -4.2%. June’s data marked the second consecutive month of sequential gains for new homes, and the third straight month of growth for existing homes. Decision makers in China have been relaxing policy across multiple fronts to support the housing market,…
June’s monthly data from China’s National Bureau of Statistics pointed to a continued slowdown in the economy, however several of the monthly indicators were better than consensus expectations. Industrial production rose +6.8% YoY, outpacing the +6% YoY consensus view, Retail sales rose +10.6% YoY, topping the +10.2% estimate, and YTD Fixed asset investment was +11.4% vs. 11.2% expected. Bright spots in the data were Industrial production, which continued to improve for the third consecutive month, and Retail sales, which nearly reached a high for the year. The indicators for Fixed asset investment and Real estate investment continued to decline, with…
Updated data provided by ChinaClear points to ongoing disinterest in domestic Chinese stock markets. New A-share account openings were barely over the half-million mark for the week ending July 10, 2015, the third week in a row of relatively unimpressive data following the late May and early June trend of over 1 million new accounts per week.  Seeing continued disinterest in the market suggests policymakers’ recent efforts to revive interest in A-shares has largely fallen flat, no doubt influenced by the near -30% rout which began in mid-June, and only paused after authorities basically allowed half of the market to…
After stocks in Hong Kong and Mainland China both fell by over -13% last week before managing some gains to narrow losses to just over -5%, the week ahead should be interesting. Both the Shanghai Composite and Hang Seng indexes have recovered from being oversold, thanks to gains on Thursday and Friday, and last week’s headaches haven’t really been resolved, only postponed. According to media reports, a little over 300 stocks which were previously suspended will be eligible for trade on Monday, but that still leaves about 1,000 stocks which aren’t. Margin debt did rise on Friday, barely, its first…
Sunday, 12 July 2015 00:00

Week in review – Jul 10, 2015

US-listed China stocks fell for a fourth straight week this past week, shedding as much as -15% before closing with losses of about -4.6%. Stocks listed in Hong Kong and Mainland China also sold off, with the HSI closing the week down -4.5% and the Shanghai Composite hitting a mid-week low of -14% before recovering on Thursday and Friday to close nearly flat on the week. But looking at the stats above doesn’t tell the whole story; volatility in Chinese companies traded both in the US as well as in Hong Kong and Shanghai was incredible. Despite efforts during the…
China Finance Online (JRJC) released Q1 FY2015 results which included revenue of 13.7 million USD and a net loss of -1.3 million USD. Compared to a year ago, the top line fell   -41% YoY, and was -31% QoQ. The main reason for the drop in revenue was weakness in the company’s precious metals trading business, which was somewhat out of favor with Chinese investors while the domestic equity markets were rallying earlier in the year. Gross margins fell both YoY and QoQ, due to a change in the revenue mix (financial services revenue contributed about 69% of the total, down…
Thursday, 09 July 2015 00:00

Eco data - Inflation for June 2015

China’s National Bureau of Statistics released inflation data for June 2015 which showed a small improvement in consumer prices (CPI was +1.4% YoY vs. +1.2% last month), but further deterioration for producer prices (PPI worsened to -4.8% YoY vs. -4.6% in May). Although CPI was better than expected (+1.4% vs. +1.3% estimate), PPI of -4.8% YoY fell short of expectations, suggesting that manufacturers in China were still facing difficult conditions with both input and output prices continuing to slide lower. For the first half of the year, consumer prices rose +1.3% YoY, well beneath policymakers’ full year target of 3%,…
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