August trade data is in for Guangdong, and it is not looking too shabby. According to official numbers reported by Nanfang Daily, exports remained in positive territoryat +1.23% YoY, and even picked up from the low growth point seen in July of +0.5%. Imports were still weak, but the pace of the drop, at -8.4%, was an improvement on July’s -12.7%.
We had been intuitively expecting worse, given the China macro data released last week showing industrial production had slowed sharply in August. We still don’t have that data for Guangdong, so we cannot make comparisons yet. Moreover, in issuing these trade numbers, it seems like Guangdong has jumped the gun on the custodians of the national accounts, because China’s trade data for August isn’t out yet.
The Chinese economy slowed sharply in August, preliminary data shows. Although trade data has not yet been released, output and investment are both down significantly, sending stocks lower on regional indices. (Trade is likely to be worse, if recent trends are a guide.)
Guangdong, meanwhile, has yet to release its full GDP data for July, let alone August. One can only presume that it is taking the National Bureau of Statistics a bit longer than normal to verify the provincial data from around the country. That, or there is growing sensitivity about their release that requires further internal debate and clarification.
After a weekend of chaotic scenes in Hong Kong, including fistfights between rival camps in the streets, Hong Kong’s outgoing monetary chief, Norman Chan, tried to present a picture of fortitude and calm to investors today.
As SCMP reports Chan saying: “The financial market in Hong Kong is much bigger nowadays than at the time during the Asia financial crisis in 1998. The short sellers who want to attack the local currency would find they would need much more bullets to carry out the attacks, which would be too expensive for them to so. As such, the public does not need to worry about the short sellers’ attack to the peg as they would not be able to repeat what the short sellers were doing during the Asian financial crisis.”
He does have a decent argument. The Exchange Fund stands at HK$4.138 trillion (US$528.73 billion), 4.5 times more than the level at the end of 1998, when it was last attacked by speculators in the wake of the Asian Financial Crisis. He also says there is no evidence of a major movement of capital out of Hong Kong.
However, one has to wonder why Chan is bothering to comment at all, if the government’s ammunition is so extensive that the public need not worry about it. While Chan says there have not been significant short positions taken against the HK dollar recently, is he seeing something he doesn’t like in the way local depositors are switching into US dollars? We will just have to wait and see.
Li Ka-shing, Hong Kong’s richest man, can’t seem to get an audience with the Chief Executive. How else is one to understand his public plea for the protesters to be “given a chance”? Unless, of course, the billionaire was aiming his comments at the public and had no need of a meeting with the person who has the power to to address #3 on the protesters’ list. That is possible. But why might the 91-year-old retiree feel the need to feel the protesters’ pain? Or rather, why now, rather than at any time over the past 22 years since the handover, a time in which he has, along with his fellow oligarchs, steadily reduced their living space, held their wages stagnant, and raised their cost of food?
In any case, the plea seems to have fallen on deaf ears. CE Carrie Lam chose today to focus on other more pressing issues. Read the SCMP’s wrap here.
After another weekend of mayhem in Hong Kong, during which the Central MTR station was set on fire, it was heartwarming to see schoolkids today lined up, holding hands, as a reminder that most of Hong Kong’s protesters are peaceful. Junius Ho, legislator and apparent supporter of the White Shirts, may not like it, but if this is the way all the protests can be held, Hong Kong has a better future ahead.
We will need to wait awhile for provincial data to follow, but it would not be surprising if Guangdong takes the national lead in showing weakness during August. Data for China’s trade released over the weekend showed an unexpected drop in exports and imports, as the trade war continues to bite.
Analysts quoted by Reuters said it was clearly the result of a weaker than expected external environment, and came despite the devaluation of the Renminbi.
A closer look at data comparing the Greater Bay Area to the rest of the country might give cause for concern: although the economy here is growing faster than the national average, it is largely due to rising investment levels rather than industrial output (i.e., we are spending more than we are making).
It doesn’t take a rocket scientist to figure out why. The province’s industrial machine has for decades been heavily geared toward foreign trade. Now, exports and imports are falling here at a rate faster than the national average because Guangdong is more exposed to the loss of demand from its traditional trading partner.
However, none of this should come as a surprise, and it should not be cause for alarm, either.
The widely watched Production Managers Index (PMI) for Hong Kong, provided by Caixin and IHS Markit, has plunged to its lowest reading since the financial crisis of 2009. This indicates that the economy is on course for its first recession in a decade, as business activity is increasingly disrupted by “protest-related paralysis”.
As the report says: “Worries that both the US-China trade dispute and the local political situation will worsen in coming months, meanwhile, saw sentiment about the outlook plunge to the lowest since data on expectations were first collected in 2012.”
Guangdong is the country’s most generous, philanthropic, charitable province.
This not what Cantonese people are known for around the country, we dare to say. Nevertheless, the facts speak for themselves. By the end of August, the province had 1,050 charities, ranking it first in China. Only 121 of these were public. Continue reading Guangdong leads in charity stakes→
Shenzhen has 2,179 companies that disclosed semiannual reports for the half year up to August 31. And thanks to the beavers at the city’s statistical data office, we now know that 80% of them are in the black, and half are growing positively YoY.
Their combined revenues came to RMB5.953 trillion, which is up 9.36% in the first half, generating net profits of RMB407.961 billion, down 0.87%. 1892 companies, accounting for 87%, were profitable; the net profits of 1240 companies, which account for 57%, registered year-on-year growth; and the growth rate of 519 companies’ net profits was over 20%.
New industries like communication, electron and artificial intelligence are showing the fastest growth. Communication firms recorded net profits up 278.69%, with 23 companies achieving at least double-digit growth.
According to the Shenzhen Stock Exchange, 989 companies are listed as “new strategic industrial companies”, of which 863 were profitable, with revenues of RMB2.323 trillion, making up 40% the total revenues in Shenzhen.
It is also notable that “new strategic industrial companies” in Shenzhen invested RMB130.132 billion in R&D, up 30.21% YoY.