Archives of “February 2020” month

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China says that preventing people from entering borders is unreasonable

  
  Analysis
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But isn’t that what they are doing in Wuhan?

I’m sure China isn’t too happy about the negative attention it is getting in the media because of the coronavirus outbreak situation.

But I don’t think you can blame others for taking more drastic action in order to err on the side of caution when there is still limited information regarding the virus itself.

The fact that we are seeing countries such as Singapore and New Zealand stepping up security travel measures may yet potentially spark others to do the same, and that is something China isn’t too happy about I reckon.

PBOC says that stock market plunge today is due to some irrational factors

  
Analysis, Global Indices
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Says that impact from the virus outbreak on China’s economy is temporary

  • Stock market plunge also due to panic triggered by ‘herd effect’
  • Virus outbreak will not change China’s long-term economic fundamentals
  • Economic development still has positive factors and shows strong resilience
Chinese authorities have been offering a lot of reassurances during the course of the day and I reckon this rhetoric could be one that keeps up for the rest of the week as they try to inject some calm into markets today.
For some context, the drop in the Chinese equities today is the most since 2015 and the Shanghai Composite recorded its 6th largest % decline since 2000:
SHCOMP

China’s Shanghai Composite index closes down by 7.7%

  
Analysis, Global Indices

A bad day for Chinese stocks but it could have been worse

SHCOMP 03-02

The talk over the weekend is whether or not we will see Chinese equities be battered down by more than 10%. That didn’t quite happen but the nearly 9% drop in the early stages enough to trigger a flurry of measures by Chinese officials to try and keep the calm.

Meanwhile, the CSI 300 index closes lower by 7.9% on the day with the onshore Chinese yuan still down by over 1% against the US dollar in trading today.

China cuts rates

  
  Analysis
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China cuts rates on reverse repos

  • the rate on 7-day reverse repos goes to 2.4% from previously at 2.5%
  • on 14-day RRs goes to 2.55% from 2.65%
This is part of stimulus efforts to combat the negative economic impact of the coronavirus outbreak and spread.
There was a big injection of funds today (but there is a but):
  • 900bn yuan added via 7 day RRs
  • 300bn via 14-dayers

Japan’s January manufacturing PMI improved, but South Korea’s fell. Both are in contraction.

  
Analysis, Economy

Japan’s final manufacturing PMI for January has come in at 48.8 (the preliminary was 48.6)

We have also had the same from South Korea, coming in at 49.8
  • slipping into contraction from December’s 50.1
Elsewhere in the region, a mixed bag:
  • Taiwan January manufacturing PMI 51.8 (vs 50.8 in December)
  • Vietnam at 50.6 (vs 50.8 in December)
  • Malaysia 48.8 (vs 50.0 in December)
  • Philippines 52.1 (vs 51.7 in December)
  • Indonesia 49.3 (vs 49.5 in December)

The Richest Man in Babylon Rules

  
Analysis, Education
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The Richest Man in Babylon is a great little personal finance book set as an ancient fictional tale that explains the ‘The Seven Cures to a Lean Purse’ and ‘The Five Rules of Gold’.

The Seven Cures to a Lean Purse:

  1. Start thy purse to fattening. Pay yourself first. Save money before you pay any bills.
  2. Control thy expenditures. Don’t spend every penny you make or you will be broke no matter how high your income becomes.
  3. Make thy gold multiply. Invest capital in assets that go up in value.
  4. Guard thy treasures from loss. Your number one priority is to keep your investment capital safe from loss.
  5. Make of thy dwelling a profitable investment. Buy a home in the right location as a hedge against inflation and to create equity and ownership over the long term.
  6. Insure a future income. Convert your earned income into assets that can create future case flow.
  7. Increase thy ability to earn. Grow your earning power through education, building skills, gaining experience in a field, or promotions to higher levels of responsibility.

The Five Laws of Gold:

  1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family. Save 10% of your income each time you are paid and convert it to investment capital.
  2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field. Invest your capital for growth and compounding.
  3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling. Find a successful model or system to copy for investing your money.
  4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep. Never put money in something you don’t fully understand.
  5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment. This fastest way to go broke is to try to get rich quick.

the richest man in babylon

Fitch has affirmed Japan’s rating at A with outlook stable

  
  Analysis
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Fitch rating agency of Japan – affirms ‘A’ & outlook stable

  • expects Japan’s broad policy continuity in coming year
  • says in addition to low interest rates, positive nominal GDP growth has kept trajectory of Japan’s public debt in check
  • inflation to remain murted in 2020 after pikcing up slightly in DCec 2019
  • does not expect change in the BOJ’s policy settings

China’s Global Times reports 30 separate measures being taken today to stabilise China markets

  
  Analysis
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The GT does not outline what the 30 separate measures are unfortunately.

The piece says the outbreak will subtract 2% points from GDP growth and, in response:
  • officials have moved swiftly to implement growth stabilizing measures
GT lead with the People’s Bank of China action to come today
  • PBOC to inject 1.2 trillion yuan into the market … through reserve repurchase operations
Its a shame the GT does not elaborate with the info
  • the net effect is not a 1.2 tln yuan injection due to slightly over 1 tln yuan of funds maturing today.
  • The net injection is in the order of 150bn yuan.

Not doing so raises the question they have been not quite so forthright elsewhere. Which is not helpful. Anyway, this is what the article says further (in brief)

four government agencies that oversee the economy, including the Ministry of Finance (MOF), the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission (CSRC), issued financial support aimed at combating the coronavirus … 30 measures include
  • CSRC – would release and study tools to prevent risks and ease market panic
  • MOF released measures including offering loans with up to 50 percent discounts on interest to companies
  • Special financial services will also be provided for those affected by the epidemic, along with small and medium-sized businesses
  • Other agencies, such as the Ministry of Commerce and the National Development and Reform Commission measures include providing help for companies to resume production and expand foreign supplies for necessary products during this critical period.  
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