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Director’s Cut
Strategic pig release to cut inflation
In June, the US and 27 other countries agreed to release 60 million barrels of oil
from strategic reserves to drive down oil prices and support global growth. A few
weeks later, China’s Ministry of Commerce announced a reserve release in an
effort to address the high price of what matters more to them, the price of pork.
As you can see from the chart below, China’s reserve release may be having an
impact (while oil prices are higher now than when the IEA oil release was
announced), with Paul Cavey reporting that pig prices in 18 of China’s 26
provinces fell last week. It’s also important to note that pork prices usually post
their strongest rise in August. So this adds to an encouraging picture that pork
prices have peaked, which would, of course, be good news for inflation, as pork
is a large part of China’s CPI basket. Slowing inflation fits with Paul Cavey’s
picture on China, and the other part is slowing growth. We are seeing this
slowing in the latest PMI data, although the official figure is still above 50. In his
view, these two trends are likely to continue, allowing China policymakers to
loosen monetary policy in the second half of the year.
Paul Cavey’s latest report also contains some interesting notes from his trip to
Changsha in the hot province of Hunan. While there, he saw clear evidence of
property weakness, including a huge advert hanging from the side of one of the
many towers under construction saying, “Buy three (rooms), get two free.” This
fits with the idea that credit conditions are tight in China, in contrast to a report
from Fitch that claims credit conditions are still loose
Highlights
Michael Kurtz believes a US debt downgrade benefits commodities and
extractive countries like Indonesia, Malaysia and Thailand.
With evidence the chemicals cycle is peaking Christian Faitz has cut BASF
(BAS GR) from Outperform to Underperform.
Zhixuan Lin remains a buyer of Great Wall Motors (2333 HK) on the Ashares
listing and ongoing earnings momentum.
Gary Pinge believes investors are underestimating the brand value at Esprit
(330 HK), and he has upgraded the stock to Outperform.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Director’s Cut
Strategic pig release to cut inflation
In June, the US and 27 other countries agreed to release 60 million barrels of oil
from strategic reserves to drive down oil prices and support global growth. A few
weeks later, China’s Ministry of Commerce announced a reserve release in an
effort to address the high price of what matters more to them, the price of pork.
As you can see from the chart below, China’s reserve release may be having an
impact (while oil prices are higher now than when the IEA oil release was
announced), with Paul Cavey reporting that pig prices in 18 of China’s 26
provinces fell last week. It’s also important to note that pork prices usually post
their strongest rise in August. So this adds to an encouraging picture that pork
prices have peaked, which would, of course, be good news for inflation, as pork
is a large part of China’s CPI basket. Slowing inflation fits with Paul Cavey’s
picture on China, and the other part is slowing growth. We are seeing this
slowing in the latest PMI data, although the official figure is still above 50. In his
view, these two trends are likely to continue, allowing China policymakers to
loosen monetary policy in the second half of the year.
Paul Cavey’s latest report also contains some interesting notes from his trip to
Changsha in the hot province of Hunan. While there, he saw clear evidence of
property weakness, including a huge advert hanging from the side of one of the
many towers under construction saying, “Buy three (rooms), get two free.” This
fits with the idea that credit conditions are tight in China, in contrast to a report
from Fitch that claims credit conditions are still loose
Highlights
Michael Kurtz believes a US debt downgrade benefits commodities and
extractive countries like Indonesia, Malaysia and Thailand.
With evidence the chemicals cycle is peaking Christian Faitz has cut BASF
(BAS GR) from Outperform to Underperform.
Zhixuan Lin remains a buyer of Great Wall Motors (2333 HK) on the Ashares
listing and ongoing earnings momentum.
Gary Pinge believes investors are underestimating the brand value at Esprit
(330 HK), and he has upgraded the stock to Outperform.
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