Global markets

We recently wrote about the proliferation of Chinese deception of foreign investors and the regulator’s inability to do anything about it other than delist the companies, which they won’t do, presumably to maintain a healthy trading relationship. continue…

by Roger Montgomery Posted in Global markets, Manufacturing.

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In the media last week, we emphasized the prospects for a hard landing in Australia. Being tied, by commodities, to the slowing growth of China puts Australia in the path of a serious economy malaise. Since 2010 we have been warning investors about the declining iron ore prices, Australian dollar and employment prospects. Back then China’s growth was being advertised at 12 per cent – fuelled in no small part by the property glut that was under construction. continue…

by Roger Montgomery Posted in Energy / Resources, Global markets.

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In this interview with Ticky Fullerton on ABC’s The Business on 6 May 2014, Roger looks at the Chinese export and property industries, and how they impact the Australian economy. Watch here.

by Roger Montgomery Posted in Economics, Global markets.

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The Nasdaq fell more than 3 per cent overnight. What’s behind it? continue…

by Roger Montgomery Posted in Global markets.

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In this interview with Ticky Fullerton on ABC’s The Business on 8 February 2014, I discuss the implications of the recent Australia-Japan Free Trade Agreement, and the moves that should have been made instead – starting with a comprehensive tax review. Watch here.

by Roger Montgomery Posted in Global markets.

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Condemnation of Russia’s annexation of Crimea by Ukraine’s northern and western neighbours has been surprisingly quiet, and once again the US has been left to do the heavy lifting in terms of playing “global sheriff”. continue…

by David Buckland Posted in Economics, Global markets.

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By Derek Scissors, published in the South China Morning Post

People are going to be discussing the flaws of Chinese finance for many years. Here’s a helpful guide: as soon as you see or hear “China’s Lehman moment” used seriously, stop paying attention. continue…

by Guest Author Posted in Global markets.

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Over the past decade many Chinese-based companies have listed in the US. For the larger stocks, such as PetroChina, China Mobile and CNOOC, the American Deposit Receipt (ADR) represents a secondary listing, and often Hong Kong is the primary place of listing.

However for about 200 smaller stocks (with an aggregate market capitalisation of US$84 billion), the US is their primary market.

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by David Buckland Posted in Financial Services, Global markets.

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The Federal Court’s decision against ratings agency Standard & Poors has significant implications for both the Australian and global markets – Roger provides insight into why this is so in discussion with Ticky Fullerton on ABC1’s The Business broadcast 6 November 2012, together with his insights into the latest RBA rates announcement. Watch here.

by Roger Montgomery Posted in Global markets, TV Appearances.

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In 2008, China implemented a massive economic stimulus program focused on fixed assets, with a concentration on construction. This program may have been necessary for stabilisation, but led to significantly increased capacity, particularly in China’s steel and cement industries. Annual capacity growth in recent years has been double or triple China’s economic growth.

Australia’s material stocks were beneficiaries of strongly rising demand for coal and iron ore, and many were at or near record share price highs in the first half of 2011.

Meanwhile the Shanghai Composite Index at 2100 is at the lowest level since the GFC lows of late-2008.

The consensus view is for increased infrastructure spend from China over the foreseeable future to boost demand and prices. If correct, one might conclude that the slowdown is already “priced in”. However, we have been examining the interim results of Chinese cement, steel and shipbuilding companies. We are seeing severe earnings downgrades across the board: capacity is exceeding production, utilisation is declining, demand is restrained and inventory levels are rising. Excess steel production is being exported and many global steel and material companies are also seeing their earnings severely cut.

While the Chinese command economy might continue building the odd ghost city or expressway into the Gobi Desert, the transformation from fixed asset investment to consumption is less steel intensive. Until the severe downgrade of the Chinese (and international) material stocks becomes consensus, Montgomery will continue to keep our powder dry in this area.

by Roger Montgomery Posted in Global markets.

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