il ciclo della Cina sta scendendo - gz
By: GZ on Domenica 24 Ottobre 2004 15:43
Andy Xie l'economista cinese di Morgan Stanley e' il migliore che mi sia capitato di leggere sulla Cina. E' una fortuna che si possano leggere semi-gratis le opinioni di uno cosi' bravo e prenderei appunti perche' ci sono idee ottime oggi qui
Per quanto riguarda la rivalutazione della valuta penso abbia ragione, il quadro che fa e' plausibile e se e' vero che il 50% dei crediti bancari alle imprese e immobiliari sono incagliati perche' sono stati spinti dai funzionari di partito per motivi politici allora forse alla fine svalutano !.
Per quanto riguarda poi il cibo cinese a cui accennavo, Xie nota che le societa' occidentali che finora stanno sfondando in Cina sono le catene di ristoranti americani fast food perche' sono gli unici posti che garantiscono uno standard di qualita' e igiene costante!
Bella anche la sua osservazione su WalMart e gli ipermercati in Cina
MONDAY, OCTOBER 25, 2004 online.barrons.com/
Morgan Stanley's iconclastic China watcher sees further drops in stocks
WHEN CHINESE OFFICIALS BEGAN making noises about tightening credit last year, Andy Xie advised Morgan Stanley's clients that he was turning negative on China. At the time, many investors believed China was merely tapping on the brakes to bring world's fastest growth rate down to a stable cruising speed, which would let equities continue their seemingly unstoppable advance. But Xie watched with growing concern as the central bank raised deposit reserve requirements, and then as the Politburo decided to restrict new lending in steel, aluminum, autos and real estate.
And although China may indeed still be trying to engineer a soft landing, the boyish, soft-spoken economist argues, the game is over for investors. The downturn will last for at least a year longer, and Chinese stocks "are nowhere near the bottom," he asserts. And if you want to play China's historic growth? Xie's surprising answer is to buy a handful of American blue-chip companies making inroads into the Middle Kingdom.
Many investors already pay attention to Xie, 44 (his name is pronounced "Shea"), who as Morgan Stanley's chief Asia Pacific economist has received a raft of awards from the likes of Caijing, a prominent Mainland finance magazine, and Institutional Investor. He's known for incisive commentary and for traveling further afield than many emerging-markets investors claim to.
Anybody else interested in what Morgan Stanley's own chief global economist Stephen Roach dubs "the world's most powerful growth story" would do well to listen to Xie. Cheah Cheng Hye, the well-regarded chief investment officer of Value Partners in Hong Kong, says, "Andy Xie is one of a small number of economists even a bottom-up investor like me has to pay a lot of attention to." Cheah calls Xie's work "original" and "sharp," and says Xie isn't afraid to tell investors what they don't want to hear.
Andy Xie's China plays: McDonald's, Wal-Mart.
Roach, Xie's boss -- who's notorious for optimism about the Mainland -- says Xie "taught me everything I know about China." Indeed, Roach lately is revising his shorter-term view of China to reflect Xie's caution.
His first call after joining Morgan Stanley in '97 was that China would plunge into deflation -- unless it followed South Korea in devaluing its currency. He also said Hong Kong's real-estate bubble would collapse. He was right. In '99, as China prepared to enter the World Trade Organization, he turned bullish. "Most people thought 'WTO -- so what'? I thought, 'it's the start of an investment cycle.' In China, which is boom-bust, it's all about the catalyst for the investment cycle." Many investors have run aground on China before, in part because of a dysfunctional financial system and a politically directed economy.
Two forces drive China's economic cycles: the Federal Reserve, which regulates U.S. demand for China's exports, and the Communist Party, which mints new officials every five years after the Party Congress. The new officials routinely push for new investment. More recently, the two forces coincided. Then Chinese officials began to fear the inevitable bust. "My job is to predict cycles right, and the boom-bust cycle is driven by politics," says Xie. Thus, the giant sell signal indicated by the Politburo's lending restrictions.
And cycles last surprisingly long. Historically, it takes about two years for China's investment growth rate to bottom when the cycle turns sour. China's average investment growth rate is 12% to 15%. The current growth rate, at 30%, is still twice as high. "The consensus view about China is that the worst is behind us," says Xie, but "This is just the beginning." Xie recently cut his 2005 Chinese-growth forecast to 7%. He thinks GDP will grow 9.5% this year.
The Mainland's economy slowed markedly in April, but turned higher as the government began hinting that previous tightening measures had been sufficient to achieve its goals. After the Party's central committee met several weeks ago and made dovish noises about credit, Xie prepared for another wave of speculation.
Most investors, in contrast, think that slowing money-supply growth and China's need to boost investments in its underdeveloped interior suggest that the next move will be an easing. They're wrong, Xie says.
For all that China has restricted new lending, it hasn't been able to raise interest rates because it fears inviting more speculation, as well as a crash in the property market. Shanghai is a case in point. At the heart of Shanghai's real-estate boom are the Taiwanese, who are betting that both China's currency and property values will rise. That's why Shanghai property has defied three increases in U.S. short-term rates. Last year, the value of new residential property was equivalent to 17% of Shanghai's economic output. Most of the speculators are likely to lose their shirts, he says.
A trigger for the downturn might be a rash of inflation scares ahead, as rising food and fuel prices erode factory-workers' wages -- and as a result, migrant workers refuse to show up. That's already happening in some places. That's bad news for Japan and South Korea, which are suffering from a slowdown in capital-equipment exports.
And boom-bust cycles, while creating gross-domestic product growth, "don't create value for capital," says Xie, adding, "I think that Chinese stocks are still overvalued." The H-share index -- Chinese companies with secondary listings in Hong Kong -- is creeping back to last December's levels, but is off 17% from its peak of 5,391.28. The "H" share index is China's most representative, Xie relates, and is stuffed with cyclicals. The bottom, he says, is when the index trades below book value. At the moment, it trades at twice book, and 15 times peak earnings, even though Chinese companies sport some of the lowest returns on equity around.
Xie is recommending instead that investors own Taiwan and Hong Kong. Although the two have needed to raise interest rates, domestic demand is on the upswing.
And those betting on an imminent revaluation of China's currency, including President Bush, will be disappointed; the renminbi, says Xie, "is not going to be revalued for at least two years." China's banking system is rife with bad debt, and boosting the currency will reduce export revenue and make repayments tougher. When China does revalue, Xie figures the currency will fall, not rise, as the central bank prints money to help banks restructure portfolios of soured loans.
Xie recommends U.S. investors seeking to avoid the wild rides of China's bourses instead should own consumer brands such as Yum Brands, with its Kentucky Fried Chicken franchises, and McDonald's, which are creating valuable consumer franchises. The one-child policy has created a nation of spoiled children, and trips to KFC are good ways to spoil Junior.
This view was cemented on a hot, dusty trip to Taiyuan, the capital of Shanxi province. That's when Xie saw that KFC and McDonald's managed to keep their restaurants clean amidst the chaos, suggesting higher standards that would attract customers. "Office girls don't want to sit next to a guy smoking cigarettes in a dirty restaurant. These two companies are creating the most valuable franchises in China. If you're really bullish about China, buy these two companies."
Hypermarkets, Xie argues, also obviate the need for increased government regulation by ensuring quality merchandise themselves. A big advantage is that population density in Chinese cities is three-to-four times greater than for a U.S. city. Sales volumes are greater as a result. "They're driving out local retail competitors. Hypermarkets will be the main distribution channel. Wal-Mart will become huge in China! It is just beginning."