Wednesday, August 31, 2011

The Outlook for Chinese Equities

The global growth slowdown is much on the minds of financial analysts in Asia.HSBC says a fall in demand is already affecting countries in the region.China,India and South Korea are export-driven.China Daily said the European debt crisis will affect China's real economy.
Nonetheless,the major brackets are doing well,according to John Tang,a China strategist at UBS.I don't think we are gonna see earnings affected very much.If we still see 8-9% growth,bank earnings won't be much affected.The outlook for the index is actually quite good.
The Japanese yen or bond are not an option,and the euro is even worse.The U.S. dollar will still be a must have.
Real estate is the most upbeat sector.Earnings are very robust;valuation has been quite low.It is the number one consumer sector in China.Look past the short political headwinds.I don't think we should be trading at that low level,Mr.Tang observed.

Wednesday, August 24, 2011

Shortfall of Rare Earth Elements Persists

Molycorp is the sole producer of rare earth oxides in the Western Hemisphere.The Mountain Pass,California company has reached profitability,and CEO Mark Smith indicates that the condition out of China is driving his company.The supply side is not nearly strong enough to meet the demand both in and outside of China.
We're seeing not just price realisation,but a volume increase as well.We see the demand continuing to climb very rapidly.China cannot produce enough for their own in country needs.
A 30-35,000 ton supply of rare earth is needed per year.Molycorp puts out 5-6,000 tons for its customers.We are fully funded to close the Sumitomo deal,under which Sumitomo Corporation of Japan will provide Molycorp with financing in exchange for a seven year supply of rare earth products.We certainly would like to enter into contracts.
We have to stay focused on our 781 million dollar expansion project.It is the number one priority for every employee in the company.We have to bring that project in on time and within budget.That's what people invested in Molycorp for.
We don't foresee any let up in demand for rare earth elements,Mark Smith noted.The oxides,considered critical by industries such as aerospace and defence,are utilised in diverse applications such as lasers;computer memory;aerospace components;magnets;batteries;and PET Scan detectors,as well as X-ray components.

Wednesday, August 17, 2011

Analysing The Current Financial Problem

Komal Sri-Kumar,Chief Global Strategist at TCW,thinks the fundamental problem is you have an excess of debt in the world.The Federal Reserve left open the possibility of QE3,or more quantitative easing.It's something to be worried about this late in a recovery.
If we don't do any structural reforms,I can't see any improvement.We need to have free trade agreements;a more flexible labor market.I think we are in a recession now and into Q4.
We are looking into defensive areas.We like energy;information technology.Stay away from European equities and fixed income.The corporations have something like two trillion of cash.The money is kept mostly outside the U.S.,away from higher taxes.
I considered QE2 alchemy.You need incentives,getting workers to work and increase productivity.You cannot get anything else out of monetary policy.Many companies are firing domestic workers as they hire them abroad,because it is more efficient,Mr.Sri-Kumar noted.
TCW,the Trust Company of the West,offers institutional and individual investors a wide array of U.S. Equity,U.S. Fixed Income,Alternative and International strategies.It is committed to fundamental research and superior customer service.Based in Los Angeles,TCW was founded in 1971.

Wednesday, August 10, 2011

BlackRock's Downgrade Reaction

The timing of the downgrade of U.S. credit did take us by surprise,said Peter Fisher,head of fixed income trading at BlackRock,but we did a great deal of planning to protect our clients.It's a wake-up call about the level of risk in the world.A number of investors will take it as one more risk.They're selling risk assets,not Treasuries.
We're not mechanistic sellers or buyers.We are managing risk and looking for opportunities that this downgrade may create.The risk that the U.S. will not pay is pretty marginally increased.Clearly,coming in the fragile markets,it's one more straw breaking the camel's back of investors.
U.S. Treasuries were 60% of all AAA assets.It's a liquidity pool with great transparency.There's a little too much overreaction.Do not change behaviour abruptly.We've been up in quality and liquidity to try and brace ourselves,Mr.Fisher indicated.
BlackRock is the largest money manager in the world,with 3.66 trillion dollars of assets under management.It provides investment,advisory and risk management solutions from offices in 26 countries.

Wednesday, August 3, 2011

Thriving in China:Hang Lung Properties,Ltd.

Ronnie C. Chan,Chairman of Hang Lung Properties,Ltd.,a Hong Kong-based developer,owner and manager of upscale real estate,thinks the government is finally heading in the right direction after 10 years,releasing more land for sale.We are not forced to sell,with more than 10 billion dollars in cash.I don't think this is the time to sell.
We want to be in commercial.The problem is,the government is building a lot of subsidised housing,driving residential developers into the commercial field.Wages are a big issue,not construction costs.
We're building five mega malls,but China can still pass increases on us.There are no fixed contracts in China.We are opening one in Xinan.It is fully leased six months ahead of opening.
As for expanding outside of China,Mr.Chan says he doesn't think he is smart or foolish enough to look elsewhere.
Hang Lung Properties is a constituent stock of Hong Kong's Hang Seng Index.It is one of the largest real estate companies in the world.Its holdings in Hong Kong and mainland China include malls,office buildings and both serviced and non-serviced apartments.
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