Financial Regulation, the Pessimistic View

Satyajit Das, who knows more about derivatives than I know about anything, has a guest post on naked capitalism about derivatives regulation. The quick summary? Don’t bet on it. “‘Holy water’, ‘hosanna’s’ or other utterances (based on particular religious convictions) will be sprinkled or said in the form of initiatives to improve disclosure, increase capital […]

Will China Control the World’s Rare Metals?

Is China building a rare metals cartel equivalent to OPEC?  Analysts began contemplating this possibility last month when a draft report by the Chinese government surfaced stating that China planned to ban the export of rare earth minerals.  Last week, Chinese officials stepped back from this claim and said they were only planning to reduce export quotas of rare metals to 35,000 tons per year from 53,000 tons in 2008.  World demand is currently over 110,000 tons and expected to grow to 188,000 tons by 2012, according to the U.S. Geological Survey (USGS).  Since China is responsible for 97% of the world’s current rare metals production, fears have developed that global green technology will be held hostage since hybrid cars, cell phones and wind turbines all require rare metals.  Moreover, the number of uses of these metals keeps rising.

To further compound the suspicion that China wants to control the world’s supply of rare metals, China has recently signed deals to buy large stakes in two Australian rare metals mines that could start production within one to two years.  It is estimated that these two Australian mines could have a combined production of 25% of current global output, according to the World Business Council for Sustainable Development. Additionally, China tried—unsuccessfully—to buy the U.S. Mountain Pass mine on two occasions.

The Shanghai Market Calls the Tune

The Shanghai and Shenzhen stock markets are still hogging the spotlight.  Although down 18.0% from its recent peak exactly one month ago, the past three days have been good for Chinese stock market investors.  After rising 0.60% on Tuesday and 1.17% on Wednesday, the SSE composite was up a very smart 4.79% today.  So what […]

Gold Passes $1,000

Everyone seems to be all atwitter over Gold breaking a $1,000 (again). This is the third time in 18 months that Gold has breached that level, failing the prior two times.    There seems to be an obsession with base 10 numerals, an evolutionary coincidence of the fact we Humans have 10 fingers and 10 toes. […]

China to Diversify out of U.S. Dollars

According to an account published in the Daily Telegraph by Ambrose Evans-Pritchard, the Chinese government is quite anxious about money printing in the United States and the effect this printing could have on China’s dollar denominated reserve assets.  For months now, the Chinese have signalled growing unease with U.S. monetary policy. And now comes the […]

Summer Vigour

After having corrected somewhat in June, stock markets across Eastern Europe developed very positively in July. But the picture is not uniform and a few interesting observations emerge when analyzing the performance during the past month and the first half of the year. The most obvious conclusion is that Turkey outperformed during the first half […]

Shanghai Cracks

As mentioned in yesterday’s edition of “Words from the Wise“, the Chinese Shanghai Composite Index has now recorded four consecutive down-weeks. The Index witnessed another massive sell-off this morning, declining by a further 6.7% to take its total loss since the peak of August 4 to 23.2%. The losses happened on concerns of large Chinese […]

China Cutting Overcapacity

The Chinese are getting serious about addressing overcapacity that has developed in industry, according to statements released by the state press. This should be seen as a positive development given concerns about a bubble in property and shares and stories of malinvestment related to China’s attempts to reach lofty growth targets. China’s State Council said […]

In this Difficult to Trade Market, You have to be More than Just Right…

From Bloomberg: Sears Holdings Reports Unexpected Loss After Pension Plan, Severance Costs Aug. 20 (Bloomberg) — Sears Holdings Corp., the biggest U.S. department-store company, reported an unexpected second- quarter loss on pension-plan expenses, severance payments to fired employees and costs to close stores. The net loss was $94 million, or 79 cents per share, compared […]

The China Effect

Today we present an abridged version of a new report examining China’s direct and indirect influences on global asset markets, and particularly equity, commodity and FX markets. The full version of the report is available to RGE Monitor premium subscribers. It takes a more in-depth look at Chinese commodity demand, the place of commodities within China’s foreign asset portfolio, as well as an update of our Chinese economic outlook. The full version also includes graphical analysis that should help readers parse recent trends in Chinese markets.  Enjoy the preview!

Chinese Equities