China starts spring cleaning on the internet

Chinese authorities have shut down about 1500 pornographic websites and are making no secret about it, reporting about it in their own state press.

A total of 41 individuals where also apprehended during the crackdown after being linked to the vulgar content.

Singapore's Straits Time reported:

"The government has warned that Internet giants such as Google, MSN and Baidu, the most popular Chinese search engine, could also be shut down if they continue to link to vulgar content.

Google, Baidu and others have since issued apologies and said they have taken steps against online porn."

Click here to read more on this story from the Straits Times

Happy New Year China!

Chinese people around the world began their 15 day long lunar-calendar celebration this weekend, ushering the start of the "Year of the Ox."

Citizens go shopping in Fuzhou, capital of south China's Fujian Province, Jan. 25, 2009.
Spring Festival, or the Chinese Lunar New Year, is the most important traditional Chinese
festival of family reunion. It falls on Jan. 26 this year.(Xinhua/Wei Peiquan)

Chinese folk lore describes the Ox as a sign of prosperity through fortitude and hard work. Appropriate considering the current financial crisis don't you think?

Just in case you where wondering... If you happen to be born in the Year of the Ox (1913, 1925, 1937, 1949, 1961, 1973, 1985, 1997, 2009), you are believed to have a natural tendency to exhibit patience, speak little and inspire confidence in others. Not a bad set of characteristics huh?

Anyway... Happy New Year to the billion + Chinese around the world and all others celebrating this joyous holiday!

Migrant workers, who could not return home for the Spring Festival,
gather together to have new year's dinner in Guilin, a city of south China's
Guangxi Zhuang Autonomous Region, Jan. 25, 2009. (Xinhua/Chen Ruihua)

Many face gloomy Chinese New Year -- AlJazeeraEnglish

Hundreds of thousands of Chinese have begun their journey home for the Chinese New Year festivities, but for many, the global economic downturn has left very little to celebrate.

Al Jazeera's Melissa Chan reports on those who have taken the one-way ticket home.

Good readings

Opinion: India, China, and Obama's Oil Policy
by William Nobrega
Business Week Online 1/22/2009


If China's Growth Goes South What Happens to Oil?
by G. Allen Brooks
Parks Paton Hoepel & Brown 1/22/2009


The China factor and what it means for the price of copper
by Simon Hunt
Weybridge, UK (SHSS) 1/14/2009

Reuters Video -- China's GDP Slows

China's economic growth slows to 6.8%

According to official data, released from the Chinese statistics bureau in Beijing, gross domestic product grew by 6.8% in the 4th quarter of 2008, a sharp decline from the 9% average gain realized in the first three quarters of 2008.

Goldman Sachs, Thompson Reuters Data Stream PBOC

- China: Total Loans 2008
- China: Industrial Production 2006-08
- China: Real GDP 2000-2009

This is big news for the global economy, especially for commodity markets. Adding to the damages was further news from the region.

Japan saw its exports decline 35% in December, the biggest drop since 1980.

South Korea released official figures, stating its economy has contracted by 5.6% in the 4th quarter of 2008.

Singapore has said it will tap into its reserves from the first time ever, with the president giving his “in-principle approval” to fund a $4.9 billion relief package.

News is not all that good, to say the least. Check out the press from a few major news sources.

China's economy slows sharply, worse yet to come – Reuters
China's economic growth slows – BBC
China's GDP grows by seven-year low of 9% in 2008 - Xinhua
China's GDP growth slowed to 6.8% in fourth quarter (update 2) – Bloomberg
S'pore to tap reserves – The Straight Times
South Korea braces for first recession in 11 years – The Business Times Malaysia
Japan's exports plunge as recession deepens – AP via Yahoo News
Miners to be hit as China's slowdown worsens – The Australian

Gloomy day in the news -- 3 part update

When I woke up this morning and did my morning news reading there weren't too many stories that particularly stood out... If you wanted to describe the news this morning in one word, it would have to be gloomy.

I've assembled separate posts according to region and subject of the the “Gloom and Doom,” as Marc Faber says.

News reel: Economic Meltdown p2 – China / Asia

Click on article titles to access the full copy from parent websites


Asian stocks tumble – The Straits Times – Jan 15, 2009

HONG KONG - ASIAN stock markets tumbled on Thursday, with Japan's benchmark sliding almost 5 per cent, on gloomy US holiday sales and renewed concerns about the banking industry.

Every market across Asian suffered steep declines, with broad-based selling hitting industries from energy to financials to exporters. A sharp drop in Japanese machinery pointed to a deepening recession in the world's No. 2 economy, while oil prices continued to fall on worries that the global economic slump will further weaken demand for crude.


China may bailout more – The Straits Times – Jan 15, 2009

BEIJING - CHINA is planning more help for its steel, textile, shipbuilding and other key industries, analysts said on Thursday, a day after the government unveiled a stimulus package for its ailing auto sector.


Chinese slowdown, serious risk for the global economy MercoPress – Jan 15, 2009

A severe economic slowdown in China is one of the biggest risks faced by the world this year, the World Economic Forum (WEF) has warned. The WEF report said a hard landing for China's economy could create domestic social tensions and put stress on the global financial system.


Foreign Direct Investment in China Falls 5.7 Percent (Update3) – Bloomberg - Jan 15, 2009

Jan. 15 (Bloomberg) – Foreign Direct Investment in China declined for a third month, adding to the toll that recessions in the U.S. and Europe are taking on the world’s third-biggest economy.

Investment fell 5.7 percent to $5.98 billion in December from a year earlier, the commerce ministry said at a briefing in Beijing today. November’s decline was 36.5 percent.


China Home Prices to Continue Falling Until 2011, DTZ Says – Bloomberg - Jan 15, 2009

Jan. 15 (Bloomberg) -- Home prices and sales in China, which fell last year for the first time in a decade, will continue dropping until they reach a “reasonable” level and will rebound in 2011, property agency DTZ said.


Hong Kong Stocks Fall to Two-Month Low; Yue Yuen, HSBC Decline – Bloomberg - Jan 15, 2009

Jan. 15 (Bloomberg) – Hong Kong's benchmark stock index fell to the lowest in almost two months on concern slowing demand is deepening the global economic slump.


China-U.S. Ties to Get Stronger, Departing American Envoy Says – Bloomberg - Jan 15, 2009 Jan. 15 (Bloomberg) -- The economies of the U.S. and China, together generating 30 percent of the world’s gross domestic product, will become increasingly interdependent in the next 30 years, said America’s longest-serving envoy to China.


China unveils support package to auto, steel industries – Xinhua – Jan 14, 2009

· China's State Council unveiled a support package for the auto and steel sectors Wednesday.
· The gov't will lower purchase tax on cars under 1.6 liters from 10% to 5% from Jan. 20 to Dec. 31.
· The plan also urges improvements in the credit system for car purchase loans.


SKorea to miss growth forecast - The Straits Times – Jan 15, 2009

SEOUL - SOUTH Korea's economic growth this year could fall below the central bank's forecast of 2 per cent as the global recession deepens, the country's second vice finance minister said in a prepared speech on Thursday.


India’s Sensex Falls to One-Month Low; Infosys Leads Declines – Bloomberg – Jan 15, 2009

Jan. 15 (Bloomberg) -- India’s benchmark stock index fell to the lowest in more than a month. Tata Consultancy Services Ltd. and Infosys Technologies Ltd. led declines after a Canadian customer for their software services collapsed.


Satyam May Take 3 Months to Restate Accounts, Delaying Bailout – Bloomberg – Jan 15, 2009

Jan. 15 (Bloomberg) – Satyam Computer Services Ltd.'s new auditors may take three months to clear up an alleged $1 billion fraud at India's fourth-largest software exporter, delaying access to government funds.

Satyam fell 32 percent today after the government said it has no plans for a bailout until the board seeks aid. Satyam won't know how much it needs until auditors confirm assets and assess how much clients owe, director Deepak Parekh said. ``The government doesn't bail out every sick company,'' he said.


India’s Inflation Rate Falls, Paving Way for Stimulus (Update2) – Bloomberg – Jan 15, 2009

Jan. 15 (Bloomberg) -- India’s inflation slowed to an 11- month low, paving the way for further stimulus measures to bolster an economy expanding at the weakest pace in six years.

Hints for configuring your long term portfolio -- from the Motley Fool

Excerpt -- This is where you buy growth -- Motley Fool

by Nate Weisshaar

Two thousand years ago, Rome ruled the known world. Two hundred years ago, China and India contributed nearly half of the world's wealth. In 1913, Argentina was the 10th richest country in the world. Change is, as they say, the only constant.

...

Making change work for you

Smart investors are positioning themselves to profit from the changes of the next several decades. Warren Buffett and Jim Rogers have both called this China's century. Mohamed El-Erian, former investment manager for Harvard's endowment and current co-CEO of PIMCO, suggests that investors hold two-thirds of their investments in assets outside the United States.

You'd be hard-pressed to find that much foreign exposure in most Americans' portfolios. Just a few years ago, most investment advisors felt that foreign stocks should make up around 20% of your portfolio at most. My, how things have changed.

-- Click here to access the full article from the Motley Fool

Commodities in focus – mixed messages from China

Until this past October / November when markets came crashing down all over the world as the US credit crisis exploded into a full blown global economic crisis it seemed as if nothing could stem China's insatiable demand for commodities.

However, once economic crisis spread to wealthy nations a chain reaction started.

First, consumers who had been eating up cheap Chinese exports for years decreased their spending as credit dried up. Less demand for goods produced by China's manufacturing sector would mean less Chinese demand for commodities.

Second, a slowing global economy produced a situation where aggregate commodity demand shrank around the world. It mattered little if a country is rich or poor, a slowing global economy would mean less demand for energy and metals.

Third, as economic problems continued to spread it became less and less likely the economic dragon of China would be able to ride the storm out. If a global recession occurred, China would find it very difficult to rely solely on their domestic economy and international currency reserves to keep things growing as fast as they had been from 2001-2008.

Finally (and this is a over-simplification), combine all facts and you get a situation where the future of the global economy is unpredictable. Meaning, no one really knows when Chinese demand will pick up again, no one really knows when the global economy will recover and therefore investing in metals and energy seemed foolish if recession would hamper demand in the near future.

That being said, a few interesting stories passed through the presses this weekend. The first two indicate demand is returning to the commodity markets in China, the second two tell a different story.

Baoshan Steel, Angang Steel, Wuhan Iron & Steel and Maanshan Iron & Steel. Four major Chinese steelmaker stock ratings where raised by Credit Suisse, which said improving demand will help raise steel prices (click here for Bloomberg LP article).

China National Petroleum Corp., the country's biggest oil and gas producer, said it plans to increase oil and gas production by 5% annually to meet domestic demand (click here for Bloomberg LP article).

China's State Electricity Regulatory Commission said demand and output in China will continue to shrink this year because of slower economic growth. China is the world's second largest consumer of energy.

If people are using less electricity it means one of three things. First, it could be a bad sign for the economy. It could indicate the Chinese are becoming more efficient / environmentally friendly. Or third, it may mean the Chinese are trying to save a few Yuan from the higher price they have to pay for the energy.

The correct answer in this situation I feel is the first. A slowing economy simply means less demand for energy. I don't doubt the Chinese are indeed adapting their growth strategies to be more environmentally friendly, but I don't think it is the reason their demand for energy is shrinking (80% of China's energy comes from coal). Last, I don't think it's because of higher prices, commodities after all have once again become very cheap (click here for the Bloomberg LP article).

Moving onto aluminum. China's Shanxi Guanlu said on Friday it was shutting 40,000t of aluminum capacity owing to low prices and weak demand (click here for the full article from the Mining Journal).

I think the main idea to take away with you from all of this is that the market has no idea how to make up its mind and neither do the participants in the market. If and when the global economy does see a recovery, be sure you have some of your money invested in energy and metals, because demand will return and with a vengeance.

For a bit of perspective check out what Jimmy Rogers and Marc Faber, the guru's of commodity investing have to say.



Jim Rogers - Recession and Commodities in 2008




Marc Faber - Says He'd Favor Industrial Commodities Over Gold 2009 - P1




Marc Faber - Says He'd Favor Industrial Commodities Over Gold 2009 - P2

Commodities in focus -- Copper rises in London trading as China begins to stockpile raw materials

The commodity sector has been hit hard by the global economic crisis, especially in terms of the speed of its decline. For much of 2008 as other equities faltered, shares of commodity and energy stocks seemed immune, many times leading the major US indices into the green despite poor performance in other sectors.

When markets began to tank between September – November this all changed. Year to date (2008), oil is down around 60%, copper 50%, natural gas 20%, etc. As commodities plummeted miners profits shrank, exploration slowed, new mining projects became unfeasible in light of depressed prices and speculators who had been relying on energy and raw materials as a safe investment or inflation hedge withdrew their money.

If the stimulus packages being enacted by governments around the world successfully help to re-invigorate the global financial system and we see a recovery in confidence and economic activity the recession may end sooner than expected. If this happens commodity demand will once again explode, especially considering how so many producers and explorers have scaled back their operations.

China is not oblivious to this. Much like China's logic behind securing resources in Africa to avoid supply disruptions, China is now concerned about supply disruptions that may occur if demand picks up.

Bloomberg and Reuters reported this morning that China's Reserve Bureau, the country's stockpiling agency, is buying aluminum. Analysts seem to think (and I agree in this situation) that if they are buying up aluminum at cheap prices, they will do the same for other metals.

“Aluminum inventory in warehouses monitored by the Shanghai Futures Exchange declined 18% in the past week, the largest decline since April 2007, figures from the exchange today showed. China’s Ministry of Land and Resources said two days ago the country would build emergency stockpiles of copper and other items to guard against potential supply disruptions.”

(click here to access the full article from Bloomberg, republished by the Mining Journal)

China is smart to do this, with the country's massive foreign reserves and depressed commodity prices it makes sense for them to stockpile the resources they need to ensure their development. China is worried about its slowing economy because of the potential for political unrest in bad economic times.

Considering the fact China continued to purchase commodities when they where selling at their recent historical highs, it must feel like shopping at a giant fire sale for the Chinese who can now scoop up a huge stockpile of raw materials and energy for depressed prices.

China goes shopping for commodities

If you have kept up to date as I try to do with China's oversea investments in the commodity and energy sectors you're probably aware of the fact China has been shopping for commodities in emerging markets.

Africa and to a lesser extent South America where the main benefactors of China's spending spree from 2000-2008. The two continents are home to abundant supplies of natural resources China needs to sustain economic growth. The two continents are also home to various countries that are hungry for foreign direct investment in their commodity sectors which until recent had been the main fuel behind their respective economics booms.


China also had a edge up on their western counterparts in many of these countries. Some countries in Africa and South America intimidate traditional western investors due to political instability. Others have such a horrendous human rights record that many western firms are morally inclined not work in them.

With the global slow down in full swing, cash rich Chinese companies and investment groups now find themselves in a different position. Frozen credit markets, plummeting commodity prices, depressed stock market prices and a cloudy horizon in the future have led many mining companies from developed countries to search for long-term investors with the capital to keep their operations running until the global economy improves.

China has shifted its attention away from Africa, instead focusing on possible investment opportunities in Canada, Australia and South America. Keith Spence, president of Global Mining Corp, a China-focused resource investment company was quoted in a great piece published in the Financial Times yesterday.

"The Chinese realize there are massive opportunities in the market. A year ago, they were going to Africa to acquire early-stage development assets. But now they are looking for larger tonnage, longer life, later-stage assets. There is less of an emphasis on emerging markets, because now there is choice."

Last month China's largest zinc producer, Zhongjin purchased 50.1% of Australian zinc miner Perilya for $32 million usd. Chinalco, a Chinese aluminum company has suggested it may increase its stake in Rio Tinto to nearly 15%.

(click here to access the full article on this topic from the Financial Times)

I must say it is interesting to see that although China finds itself in a more lucrative buying position that it has not shunned South America. Evidence to suggest the Chinese may perceive South America as more than simply another commodity rich area in which to extract untapped resources.

Rather it may be that South America has come to represent a region that has well developed assets, worthy of purchasing for the long-term. China is forging much closer ties with fellow APEC members Chile and Peru. China is quickly working with Peru to finalize a Free Trade Agreement and already has one with Chile. China is increasing its investment in agricultural commodities in Brazil and Argentina and hopes to continue easing visa restrictions for many of its citizens on travel to the region.

Below I've included a chart of Chinese investments / cooperation with Latin American countries. I assembled this chart about 6 months ago for my independent study / thesis. If you know of any other instances of Sino-Latin America interaction please by all means let me know and I'll update this chart.

Hungry for IPO's in 2009? Do Chinese and Brazilian firms have the capacity or guts to test the market?

It seems just yesterday that Chinese IPO's where the talk of the town. Even if you were not buying them yourself, it still seemed as if everyone else was. When you consider what an IPO is, it's no wonder why the investment communities appetite for them has disappeared.

When companies go public they offer a certain portion of their company to shareholders. In exchange shareholders invest their money in hopes of seeing a given company grow and prosper. If a company grows and prospers, shareholders are rewarded by seeing the value of their investments rise. If the company preforms poorly investors see their investments loose value.

If you have cash lying around would you trust your money in a company looking to expand or finance some project in the context of the economic climate today?


Chinese companies are feeling the pinch, turning to banks instead the stock market to raise the capital they need. The Financial Times reports “Mainland companies last year raised a record $100bn in IPOs on exchanges in Shanghai, Shenzhen and Hong Kong – far more than established bourses in New York or London.”

(Click here to access the full article from the Financial Times)

In response, the Chinese Government is attempting to encourage banks to lend to companies looking for expansion capital. The recent interest rate cuts make lending cheaper, which will help entice banks to lend, but if history repeats itself Chinese banks may find themselves with a great deal of outstanding loans that can not be repaid.

This happened in the late 90's and it could happen again. Especially if the Chinese economy is not able to weather the global recession as well as many hope. Additionally, many IPO's from 2006 and 2007 benefits not from legitimate investments from people who had faith in their business, but rather from speculative investors who wanted a piece of the profits.

Chinese media, Xinhua, reports Pricewaterhouse Cooper (PwC) expects IPO's will rise in value by 45% in the second half of 2009 as a result of the government stimulus package. PwC forecasts Companies will raise about 150 billion yuan (22 billion U.S. dollars) through IPOs in China in 2009.”

State media in China should be analyzed with a bit of skepticism for obvious reasons (it is filtered if you didn't know). This fact alone contradicts with the figures presented by the Financial Times that in 2009 over $100bn was raised. It would be nice to be told what base measure they are using when they figure the 45% increase. If anyone feels like checking out the PwC report you might be able to find out.

(Click here to access the full article from Xinhua)

Brazilian IPO's also seem to be having a tough time, as reported by Bloomberg LP today.

“The point isn’t that VisaNet isn’t interested in listing, but that there have been problems, in this market, in pricing the offer in a way that shareholders will be satisfied,” said Victor Mizusaki at Sao Paulo-based Itau Corretora, the brokerage unit of Brazil’s biggest non-state bank. “There is a deadline to turn in all the paperwork and to price the offer, and the time limit was running out.”

Brazil’s boom in IPOs dried up last year with only four companies going public compared with 64 in 2007 as the global financial crisis sent the benchmark Bovespa index down 41 percent and reduced investors’ appetite for riskier emerging-market assets. Companies raised more than 70 billion reais through initial and additional stock sales in 2007, according to data from exchange owner BM&FBovespa SA.

(Click here to access the full article from from Bloomberg LP)

All in all, I'd say IPO's are going to far and wide in the developing world for 2009. All these countries have seen the incredible attraction they garner when times are good and investors are flowing with confidence and money. They also see that when times are bad, people will pick and choose their investments very carefully. Meaning far less appetite for risky investments, in particular with companies that have yet to face the pressure of being traded and valued within the context of this chaotic and unpredictable market.

News Line: Energy in South America and China

Uruguay Opens bids for Offshore Oil, Gas Blocks – reports Uruguay Energy Ministry courtesy of Rigzone

On December 1-3, Uruguay Energy Ministry and ANCAP, the National Oil Company, will launch the offshore licensing round for exploration and exploitation of gas and oil. The blocks on offer, lie in the Punta del Este and Pelotas basins, where water depths range from 50 to 1500 meters, as well as another basin further offshore called Oriental Del Plata. The blocks' areas range from 2,500 to 10,000 square kilometers...

Click here to access the full story from Rigzone

PetroLatina Commences Drilling Colon-1, IDs 4 New Wells Sites in Colombia - reports PetroLatina courtesy of Rigzone

PetroLatina has announced a further operational update to that released on November 7, 2008.

La Paloma

The Company commenced drilling Colon-1, the first exploratory well to be drilled on the La Paloma block, located in Middle Magdalena Valley, Colombia, on Sunday, November 24, 2008. The Colon-1 well has been drilled vertically to a total depth of approximately 600 feet, to date. Drilling continues to be undertaken vertically to an expected total depth of approximately 9,072 feet in order to test the La Paz, Lisama and Umir formations. Drilling is scheduled to take 25 days in total at a cost of approximately $6 million...

Click here to access the full story from Rigzone


Petrobras' Platform P-53 Kicks Off Production at Marlim Leste Field – reports Petrobras courtesy of Rigzone

Petrobras announced that platform P-53 kicked-off its operations yesterday, November 30. This is the first production unit installed in the Marlim Leste field, in the Campos Basin.

The P-53 unit has total production capacity of 180,000 barrels per day of heavy oil, 20 degrees API, and compressing capacity up to 6 million cubic meters/day of natural gas. The platform's oil production will be offloaded to shore by shuttle tankers with the assistance of Autonomous Re-pumping Platform PRA-1 and the FSO Cidade de Macae. Part of the gas that is produced will be consumed by the platform itself as fuel to generate electricity, and the remaining will be exported to shore via the Campos Basin's gas network. The platform will reach peak production in the first half of 2010.

Click here to access the full story from Rigzone


Geopark Tests Positive Oil at Manekenk 1 in Chile – reports GeoPark Holdings Limited courtesy of Rigzone

GeoPark Holdings Limited has announced the successful testing of the new Manekenk 1 well on the Fell Block in Chile at an initial rate of approximately 1,300 barrels of oil per day equivalent (boepd). Geopark operates and owns a 100% working interest in the Fell Block...

Click here to access the full story from Rigzone


Peru's mining/hydrocarbons output rose 4.57% in Oct 2008 – reports Andina.com

Lima, Dec. 01 (ANDINA).- Production in Peru's mining and hydrocarbons sector expanded 4.57% in October from the same month last year, as the mining sub-sector increased 2.72%, the National Statistics Institute (INEI) said Monday...

Click here to access the full article from Andina.com


PetroChina Starts Developing Offshore Block in Bohai Bay – reports Dowjones Newswires courtesy of Rigzone

PetroChina Co. has started developing an offshore block in Bohai Bay with an output target of 3 million metric tons a year or 60,247 barrels a day, parent company China National Petroleum Corp. said Monday.

The Yuedong block, located in shallow water near Liaoning province, has rich reserves of heavy oil, CNPC said on its Web site, without elaborating.

Yuedong is part of the Liaohe field, China's largest heavy oil field, with annual output at 12 million tons a year or 240,986 barrels a day...

Click here to access the full article from Rigzone


China North East Petroleum's October Crude Oil Production up 135% - reports China North East Petroleum courtesy of Rigzone

China North East Petroleum has announced preliminary results for its October 2008 oil production.

Crude oil production for the month ended October 31, 2008 increased 135%, or 40,479 barrels, to 70,545 barrels from 30,066 barrels for the month ended October 31, 2007. On a sequential basis, crude oil production increased 4,627 barrels, or 7%, compared to the month ended September 30, 2008...

Click here to access the full article from Rigzone

News Line:

China Development Bank keen to support projects in Peru – reports Andina.com

Lima, Nov. 30 (ANDINA).- The China Development Bank (CDB) is interested in supporting infrastructure and agricultural projects in Peru as part of a cooperation agreement recently signed with Peruvian state-bank Banco de la Nación (BN).

"China Development Bank is very interested in infrastructure and agricultural projects that involve development of rural communities in Peru," BN general manager Julio del Castillo told Andina news agency...

Click here to access the full story from Andina.com


BRIC Shoppers Will “Rescue World” Says Goldman Sachs Economist – reports Bloomberg's William Mellor and Le-Min Lim

Dec. 1 (Bloomberg) -- The best hope to keep the global economy growing may be people like Wei Yufang. A peasant who farms a small plot beside the mud-brown Huaihe River in central China, Wei has a modest dream: to buy an air conditioner to give her family relief from the dusty heat that each summer envelops Xiaogang (Little Hill) village in Anhui province.

With economies from the U.S. to Japan in recession, Wei and the other 2.8 billion people in Brazil, Russia, India and China may provide the consumer demand needed to counter the slump.

Jim O’Neill, the Goldman Sachs Group Inc. economist who in 2001 coined the acronym BRIC from the initials of the four big emerging economies, says the faster growth investors have come to expect from these countries will survive this crisis. O’Neill, who is based in London, says the citizens of the BRIC nations are poised to spend more. “The BRIC consumer is going to rescue the world,” he says...

Click here to access the full story from Bloomberg LP


China, India Drop Inflation Controls as Economic Growth Slows – reports Bloomberg's Nipa Piboontanasawat and Thomas Abraham

Dec. 1 (Bloomberg) -- China and India lifted controls targeting prices of products from vegetable oil to natural rubber after inflation eased in the world’s fastest-growing major economies.

China today stopped requiring companies to seek approval for some food-price increases, the government said. India dropped a ban on futures trading in natural rubber, soybean oil, potatoes and chickpeas, the consumer affairs ministry said.

...

“For China, the main focus of the government is to boost economic growth and prevent deflation,” said Wang Qing, chief China economist at Morgan Stanley in Hong Kong.

In India, Prime Minister Manmohan Singh dropped a seven- month ban on futures trading in natural rubber, soybean oil, potatoes and chickpeas...

Click here to access the full story from Bloomberg LP


China's Manufacturing Contracts by Record on Exports – reports Bloomberg's Nipa Piboontanasawat

Dec. 1 (Bloomberg) -- China’s manufacturing shrank by the most on record and export orders plunged, adding to evidence that recessions in the U.S., Europe and Japan are dragging down the world’s fastest-growing major economy.

The Purchasing Managers’ Index fell to a seasonally adjusted 38.8 in November from 44.6 in October, the China Federation of Logistics and Purchasing said today in an e- mailed statement. A second PMI, released by CLSA Asia-Pacific Markets, also showed a record contraction...

Click here to access the full story from Bloomberg LP


Following visit Russian leader calls for bigger LATAM role

Russian president Dmitri Medvedev said he was very satisfied with his Latinamerican tour which took him to Peru, Brazil, Venezuela and Cuba because it enabled to re-establish strong links with the region.

...

“Latinamerica is a region developing fast, which has a concentration of significant intellectual and natural resources, and most important the peoples of the region want to cooperate with Russia”, added Medvedev

...

“We are prepared to increase political, economic and military cooperation with Latinamerican countries and their leaders, particularly in a world with so many security problems and challenges.” ...

Click here to access the full story from Mercopress

China: What's going down “east-side?”

With the world economy faltering, recovering, crashing, entering crisis, deflating, **input whatever other term you've been reading** many are hoping China will some how cushion the global down turn. Lets consider this from both ends of the spectrum.

There's one side of analysts, experts, observers, etc who believe the Chinese economy as the largest contributor to global GDP growth the past few years is in a position in which it can help the global economy move through this economic depression. Then there's the other side that inexorably links the Chinese economy to rich country demand for their cheap exports... which is decreasing at an alarming rate according to the figures.

From the perspective of a young economist who is currently living in Suzhou, China the truth lies somewhere in the middle. Before you (the readers) close this page and assume that's the obvious answer hear me out. It's not that simple...

From the window of the pizza place, which offers me high speed internet where I am currently writing this post from I see the following.

Fireworks exploding in the distance to celebrate the grand opening of something big. I don't know for what, but if i've learned anything from the past few months of living in Suzhou, a show of this caliber means the following: the government is celebrating some major achievement, a big night club has something to brag about, or perhaps a shopping center or a residential complex is opening its doors. Fireworks are a usual tactic employed as way to dazzle the populous, attract business and of course... to ward of bad spirits (which is what the tradition of exploding fireworks in China is traditionally for).

I can also see various cranes in the distance, where workers are building various new structures six days a week. These include 15-20 floor apartment complexes, 20-45 floor office buildings and other structures which I would guess will have something to do with the government.

The third thing I can see, which is worthy of mention is a giant fenced off whole in the ground which blocks the pedestrians view of the construction work underway for a new subway system set to open in 2010.

These points support the first side of the story. The Chinese economy, on the domestic front is going to keep growing even if the rich countries of the world slide even further into recession. A “Pandora's Box” of sorts has been opened here in China. The opening of the Chinese economy, the robust growth of the past two decades, the massive migration of hundreds of million of rural residents to urban centers, massive inflows of FDI and a variety of other factors have created a situation where the central government must needs to either facilitate to the best of its ability or risk imploding from within.

The recent decrease in commodity prices will only help China keep its modernization / urbanization/ domestic growth (whatever you want to call it) going. Six months ago, I was analyzing how demand was so strong in China that it mattered little in the long run how high the prices of commodities went, because in the end the Chinese would not abandon their aspirations to well... keep growing. From this perspective, plummeting commodity prices (much to the detriment of my senior thesis in which I predicted they would keep rising) is a blessing in disguise.

China's recent $586 billion stimulus package and the record slashing of Chinese interest rates is an effort by the government to keep this going. Infrastructure, housing and all that jazz will continue. This means jobs and therefore continued consumption by consumers. This also means China will keep buying the commodity inputs they need to build. So, to conclude this side of the story, this means China will continue to grow.

However, and now here comes the “dark side.” Even the two trillion plus dollars in foreign reservers Beijing claims will finance all of this, can not and will keep this going indefinitely. The money will run out, or more likely simply start to no longer be worth spending if the rest of the world, particularly the rich world doesn't get out of this global economic crisis.

Living in the wealthy Jiangsu province, home to the city I live in (Suzhou), Shanghai, Nanjing, Hangzhou (VERY wealthy cities), and various government projects I'd call the crown jewels of the governments efforts at modernization it is hard to imagine what the rest of the country is like from time to time. Due to the lack of internet and the lack of available information I havn't exactly been up to date on certain things.

For instance, in todays news alone, Bloomberg reported the following:

1 – Aluminum slumps by limit in Shanghai on Production Speculation
2 – Baosteel (China's biggest steel-maker) faces “most difficult” period in 30 years on Crisis
4 – China's small businesses face “tough winter,” more closures

“Small companies face a “tough winter,” said Li, whose organization claimed 76,000 members in the first half of this year. Two-thirds of China's small toy makers closed in the first nine months, according to customs data."

So in conclusion... as I stated above, the truth lies somewhere in the middle. If the rich countries of the world don't start buying again, China will stop growing as fast as it has been.  That is just how it is.  A large portion of the Chinese economy is still heavily depended on exports, and if that disappears it doesn't matter what happens on the domestic front. 

China will have to face the facts.  The effects will be catastrophic and horribly de-stabilizing. Which is why China is going to try to do everything in its power to present such a catastrophe from occurring, and if that means helping out more to revive the global economy I think China will assume a more active leadership role.  So far it seems they have.  How far they will go will only be seen in the months to come.

It's anyone guessing game at this point. Lets see where the next few months lead.  

News Line: BRIC Countries, US-Peru ties to grow stronger says presidential hopeful Barack Obama (special thanks to Bloomberg LP for this post)

1)  India and China step up protection from global crisis -- courtesy of Bloomberg LP

Nov. 3 (Bloomberg) -- India and China are accelerating efforts to prop up growth as a global slump threatens the world's fastest-expanding major economies.

The Reserve Bank of India on Nov. 1 lowered its benchmark interest rate for the second time in two weeks, and for the first time in 11 years reduced the amount of money lenders are required to keep in government bonds. China's central bank removed temporary controls over loans to maintain ``relatively fast'' growth, Xinhua News Agency reported Nov. 1, three days after cutting its key rate for the third time in two months.

...

Emerging Asian economies that account for one-fifth of world growth are being dragged down as their main markets in the U.S. and Europe contract, increasing the likelihood of a global recession. Policy makers in India and China are also boosting spending to prevent their economies from going under.

...

China's Premier Wen Jiabao says sustaining economic growth is the government's ``first priority.'' China has already raised export incentives, cut costs for home buyers and pledged infrastructure spending.

India and China need to move fast to implement their stimulus plans, with growth already slowing in Asia's second- and third-largest economies amid weaker foreign demand.

Click here to read the full article from Bloomberg LP

2)  China's stocks drop to a two-year low -- courtesy of Bloomberg LP

China's stocks fell to the lowest in almost two years, led by industrial companies, after a report showed China's manufacturing contracted amid the worst financial crisis since the Great Depression.

...

The CSI 300 The CSI 300 has slumped 69 percent this year, making it Asia's worst-performing benchmark index. Stocks have fallen amid concern demand for Chinese products will decline as the global credit crisis drags the world's largest economies into recession.

...

Net income at the 487 companies listed on the Shenzhen Stock Exchange's main board rose 3.4 percent in the first three quarters, a fraction of the 89 percent increase a year earlier, according to data in a statement released by the bourse today.

Economy Slows

China's economy grew at the slowest pace in five years in the three months through September as export orders shrank and industrial production waned. The expansion cooled for a fifth straight quarter, to a 9 percent gain from a year earlier.

Click here to read the full article courtesy of Bloomberg LP

3)  Subbarao Abandons India 'Inflation Vigil,' Cuts Rates -- courtesy of Bloomberg LP

 
Nov. 3 (Bloomberg) -- Indian Central bank governor Duvvuri Subbarao has abandoned the "inflation vigil'' he outlined just 10 days ago in his inaugural monetary policy statement.

For the first time since 1997, the Reserve Bank of India on Nov. 1 deployed all three of its main tools to shore up growth after inter-bank lending rates climbed to 21 percent. Economists at Yes Bank Ltd. and Standard Chartered Bank predict more interest-rate cuts following the weekend reduction.

``India's central bank has no other option but to focus on economic expansion," said Shubhada M. Rao, chief economist at Yes Bank Ltd. in Mumbai. ``Global cues have turned against growth and it was surprising to see the hawkish tones on inflation'' last month.

Subbarao, less than two months into the job, has grappled with monetary policy at a time when inflation is double the central bank's target and a global downturn threatens to hit the economy. The central bank's renewed focus on growth aligns with Prime Minister Manmohan Singh's push to buoy the economy ahead of elections due by May.

The decision to cut rates on Nov. 1 was a U-turn from the stance Subbarao spelled out in his first statement. At that time, he said price pressures could come from lower farm production, volatile oil prices and a weaker rupee.

...

Click here to read the rest of the article courtesy of Bloomberg LP

4) BRIC see no relief even as rally lures stock bulls -- courtesy of Bloomberg LP

Nov. 3 (Bloomberg) -- Forget last week's record 20 percent gain in emerging-market stocks. Hard times are ahead for equities in Brazil, Russia, India and China, some of the world's biggest money managers say.

Even with developing-nation shares trading at their cheapest levels in a decade, financial crises in Hungary and Pakistan that required international rescue packages and concern that economies from Turkey to Argentina are also teetering prompted investors to pull out of emerging-market funds at a record pace.

RBC Capital Markets cut its estimates on Oct. 23 for 2009 economic growth in Brazil to 2.5 percent from 4 percent and Russia to 4 percent from 6 percent. That may undermine analysts' forecasts for a 14.5 percent increase in earnings at a time when the global credit crunch seized up lending from Sao Paulo to Seoul and a slump in 24 of 25 developing-nation currencies last month inflated the costs of repaying dollar-denominated debt.

...

Click here to read the full article courtesy of Bloomberg LP

5)  Brazil central bank to signal interest rate outlook: week ahead -- courtesy of Bloomberg LP

Nov. 3 (Bloomberg) -- Brazil's central bank may provide signals on the outlook for interest rates after halting six months of increases to weigh an economic slowdown against inflationary pressure from a weakening currency.

Economists will be closely reading the minutes from the bank's Oct. 28-29 meeting, to be published Nov. 6, to gauge whether its unanimous decision to pause rate increases herald a change in policy.

...

Click here to read the full article courtesy of Bloomberg LP

6) After Colorado rally Obama says U.S. - Peru ties to grow stronger -- courtesy of Living  in Peru

RPP Noticias, a local news agency in Peru had the chance to speak with Barack Obama after his final campaign stop in Colorado on Saturday November 1.

After a festive meeting with thousands of jubilant supporters dancing in the streets, Obama affirmed to RPP reporters that the relationship between the United States and Peru would grow closer and stronger.

RPP correspondents explained Obama made these statements as he was leaving his rally, which was compared by Peru reporters to the presentation of a famous show-business star.

...

Click here to read the full article courtesy of Living in Peru and RPP Noticias

你好 读者（Ni hao duzhe）-- Hello readers

I must apologize to all those who once counted on this blog for perspectives, news, analysis and all the rest that used to be provided on a daily basis.  Sadly Internet restrictions and lack of access in the far east have made it difficult, sometimes impossible to access blogger. 

I write to you from the beautiful, bustling, urbanized yet serene city of Suzhou, China.  

(Click here to check out some nice pics from the cities official website)

I had planned to keep this website going strong during my year long stay in China.  Sadly, it is incredibly difficult to update from here.  I will continue to try, and I have a new internet connection arriving in a few days, which I hope will allow me more privileges as I am being forced to provide everything down to my blood type in order to obtain (hehe).

While my connection lasts i'll get what word I can out.  Everyday as I check in with the world via my blackberry I see stock markets plummeting, governments hosting meeting to address the crises, blame being dealt left and right, and my portfolio sadly decrease in value more and more.

While on this side of the Pacific, many express concern and legitimate worry that something horrible is on the verge of beginning (a global recession).  Meanwhile, from a rational point of view, I don't exactly see the world crumbling into pieces.  Buildings are still going up, the malls in China are full, people are swiping their credit cards, mortgages are being taken to buy apartments and houses, and people have generally remained hopeful of a brighter future.

Whether it will still be like this 6 months from now when the economic problems of the West more fully manifest, I can not tell.  What I can say for certain is it is not in China or any other emerging market of Asia's interest to see the United States and Europe come tumbling down. There is still tremendous room for China to grow, and grow it will.  Factories which produce goods for export to the West will shut, but the economy will re-adjust with a heavier focus on the domestic front.  

Just as the United States has centers of economic activity - New York, California, Texas, etc, so does China.  Beijing, Shanghai, the Southern Coast, the rebuilding of Sichuan will dominate China's economy on the surface in the months to come.  

Yes, hardships will probably become more obvious in the poorer regions of the country in the months to come, but they will not dictate the course of China's economy.  I have come to learn, China can not grow to infinity on its own, if it could, my Chinese stocks would not be hurting so greatly right now.  China can however soften the impact it will feel from the global financial meltdown underway right now.  

After researching, analyzing and attempting to no avail to decipher the commodity trade between China and South America, one thing I can say for certain is that the recent plunge in commodity prices will help China continue to prosper, not hurt it.  Record high prices of everything from copper, iron ore to energy had become a genuine problem for many industries here in Asia.  

In the coming months it will be interesting to see how and if a new balance can be established, and where prices will settle.  I'll leave my personal observations here, and I hope to be able to soon be in a position where I can begin bringing news, analysis and my personal observations to all readers of this site.

News Line: Live from Tokyo!

1) Asia-Latin America Collaboration by Lim Hng Kiang

Most people think of Latin America and Asia as two regions separated by culture, language and history. Yet, Asia and Latin America are more connected than we imagine.

In recent years, political and economic ties between Latin America and Asia have deepened. Not only have government–to-government links and interactions grown, but companies from both regions have increasingly come to realize the potential for doing business with each other. The growth in total trade flows between Latin America and Asia bear testament to this, having risen to reach US$267.3 billion in 2007, an increase of 24 percent over 2006 (click here to read more)....

ASEAN AND UNASUR

In ASEAN, there has been good progress made towards achieving the ASEAN Economic Community. The recent conclusion of negotiations for the ASEAN-Australia-New Zealand FTA as well as the ASEAN-India FTA Trade in Goods during the ASEAN Economic Ministers Meeting in August will not only continue to deepen ASEAN’s internal integration, but also expand its external reach. In Latin America, 2008 bore witness to the establishment of the Union of South American Nations or UNASUR, which aims to create a single market and to integrate infrastructure (click here to read more)...

SINGAPORE'S GROWING LINKS

While trade links between Asia, as well as Singapore, and Latin America have grown, there is scope to do much more. For example, bilateral trade between Singapore and Latin America increased at a compounded annual growth rate (CAGR) of 17 percent over the last three years to reach US$8.89 billion (SS$ 13.4 billion) in 2007. But this only represents 0.07 percent of total world trade and 1.6 percent of Singapore’s total trade with the world last year. There are many areas where there are opportunities for collaboration, be it in agri-business, food and beverage, electronics, oil and gas, transport, logistics or infrastructure. In fact, an increasing number of our companies have made successful inroads into Latin America in these sectors. To date, there are about 56 Singapore-based companies with 191 points of presence throughout Latin America engaged in a variety of business and investment projects.

Latin America’s infrastructure sector in particular has attracted the interest of a number of Singapore companies. Latin American governments are placing increasing emphasis on investing in robust, well-integrated and efficiently managed infrastructure to sustain growth. This presents opportunities in transportation & logistics, urban planning, water and waste management, industrial park development, and oil & gas, amongst others, in both regions. Latin America’s need for expertise in infrastructure development dovetails well with Singapore companies’ infrastructure development capabilities and search for new markets (click here to read more).

Click here to access the full article from Latin Business Chronicle


2) Venezuela's Chavez calls for creation of an Oil Bank reports Rigzone via Dow Jones Newswires

Venezuela's President Hugo Chavez on Tuesday called for oil producing countries to create an oil bank and warned oil prices could fall further.

"We once proposed the creation of an OPEC Bank...but it wasn't adopted. Lets work with the idea of an oil bank, a couple of oil (producing) countries can do it," Chavez said as he arrived in Brazil for a state visit.

Click here to access the full article via Rigzone.com


3) China has muscles to push domestic growth - Xinhua

SINGAPORE, Sept. 30 (Xinhua) -- China has the muscles to push short-term domestic growth, but Japan and South Korea will continue to grapple with various difficulties in trying to rev up their sluggish economic engines into higher gear, said Standard & Poor's Ratings Services here on Tuesday.

In recent separate reports on the three countries, S&P said China will steer its economic policy toward supporting growth, despite some anticipated hurdles, while Japan and South Korea both face political stalemates, high oil and food prices, decelerating growth, among other issues.

The report said China is counting on its strong domestic demand to pull its economy ahead this year and next, "We expect tight labor market conditions, together with the implementation of the new Labor Contract law this year, to keep wage growth strong and lower uncertainties faced by employees."

Click here to access the full article from Xinhua


4) China's economy in good shape despite global financial chaos

TIANJIN, Sept. 27 (Xinhua) -- China's economy was in good shape and capable of maintaining financial stability despite global chaos, Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), said on Saturday.

Liu made the remarks at the ongoing 2008 Summer Davos forum, also known as the Annual Meeting of the New Champions 2008, which kicked off on Saturday in the north China metropolis of Tianjin.

Though feeling gloomy about the outlook of the world economy, most attendees were confident about China's economic prospects.

"China has full confidence and capabilities to ensure sound and fast economic growth for a long period of time," Premier Wen Jiabao said at the opening ceremony.

Click here to access the full article from Xinhua


5) South American leaders blame financial crisis on US irresponsibility reports Mecropress

Four of South America’s leaders meeting in the Amazon accused the United States on Tuesday of "irresponsibility" in its handling of a financial crisis that has dried up credit markets and threatens economies around the world.

Brazil’s Lula da Silva said that rich nations are responsible for the global financial crisis, and called on the US Congress to pass a solution quickly. Emerging markets, including Brazil, are better prepared to weather the crisis than the US, he said.

“We did our homework and they didn't”' Lula said. “Those that spent the last three decades telling us what to do didn't do what they had to do. The crisis is very serious and so profound that we don't know how big it is”.

Venezuelan President Hugo Chavez warned the crisis could slow economic growth across Latinamerica and predicted that US economic power is in dramatic decline.

"This crash of capitalism and of neo-liberalism will be worse than that of 1929" Chavez told reporters at the Manaus city meeting. “No country can say it won't be affected''.

Click here to access the full article from Mercopress


6) Brazil and Argentine markets suffer record day losses

Brazil’s Bovespa suffered its greatest loss in one day since 1999. Trading dropped 13.8% before beginning to recover towards the end of the day.

Before President Lula da Silva had to come out and insist that the global financial crisis would have a limited contagion for Brazil. Trading had to be stopped for 30 minutes after the crash reached the 10% threshold but once restarted continued to fall until at the end of the day the index settled at 46.028 points, down 9.4%.

In Argentina the MERVAL index skid 8.7% and in Mexico the IPC, 6.4%; in Chile the loss was 5.7% and in Colombia, 2.37%.

For Chile it was the worst daily fall in a decade and for Argentina’s Merval the blackest day since February 11, 2002 when the market crashed 10.68%. The Argentine stock exchange has lost 13,5% in September and 30% since the beginning of the year.

Click here to access the full article from Mecropress


7) US representatives extends benefits to Andean Countries

The United States House of Representatives voted unanimously on Monday to approve a one-year extension of trade benefits for Colombia, Peru, Ecuador and Bolivia that expire at the end of the year....

Click here to access the full article from Mercopress


8) Lima's stock market plunged 15.35% in September

Lima, Sep. 30 (ANDINA).- Lima Stock Exchange (BVL) plunged 15.35 percent in September, the second biggest month drop in 2008, after a 18.73 percent decrease in July, amid an international financial crisis worsening, said Tuesday the general manager of Seminario Brokerage (SAB), Roberto Seminario. The BVL was hurt by external factors linked to a metal price drop and a collapse of several American financial institutions such as Lehman Brothers, Merrill Lynch, Bear Stearns and Washington Mutual...

Click here to access the full article from Andina News


9) Chinese buyers of Indian Iron Ore demand discounts

Chinese buyers of Indian iron ore are defaulting on import contracts and refusing to lift the ore unless the seller offers a discount on contracted prices, a top industry official said on Monday.

"Our exports are in deep red as there is no demand from China," said Rahul Baldota, president of the Federation of Indian Mineral Industries and managing director of miner MSPL Ltd.

Chinese appetite for Indian ore has fallen despite rival Brazilian miner Vale`s demand for higher prices for the ore it exports to China -- a move that initially cheered Indian suppliers.

Nearly 75% of India`s annual iron ore exports of about 100Mt go to China, and shipments normally rise after the annual rainy season ends in September.

"The Chinese are backing off old contracts. They are saying either you reduce the price or we can`t take the shipments," Mr Baldota said. "I, myself, have had to suffer two cancellations."

Click here to access the full article from Mining-Journal