Getting late here now, I'll post now just to remind me, will do a post on Shanghei / trade wars / asx effect.
Shanghei 5 year chart (black) and ASX small Ords (Red) Australias wealth is very much tied to trade with China, due to our exports of Iron Ore, Petroleum Gas, Gold, Wheat, Rare Earths, Lithium, wine, seafood and Coal to name a few. There are large trade imbalances between China / USA / Australia. Trade wars errupted beginning with an economic conflict between China and the United States from 2018, when then President Donald Trump began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. said were longstanding unfair trade practices and intellectual property theft. There were other problems, The South China Sea saga with China militarizing atolls, Wolf warrior diplomacy where China decided it could bully Australia which largely began when Australia questioned China about Covid origins and requesting China fess up. There were diplomatic issues which arose regarding the recognition of Taiwan, and then China launched cyberwarfare activities against various countries including Australia. Further issues arose when Australia banned Chinese telecommunications companies Huawei and ZTE from providing 5G technology for new networks, citing security concerns. Then we had some more rumblings when Australia suspected China of bribing certain politicians and other people in high places. But it was in early 2020 when the shit really hit the fan when then Prime Minister Scott Morrison endorsed an inquiry into the origins of COVID-19, which angered China. China's ambassador to Australia, Cheng Jingye, warned Australia it was treading a “dangerous” path, and that the Chinese may not wish to consume Australian products. Following this, China started imposing import tariffs on some Australian exports. China gave a range of reasons for the tariffs, ranging from dumping concerns to bark beetles found in timber. China denied that the tariffs were related to Scott Morrison's call for an independent investigation into the origins of COVID-19. The tariffs included a wide range of Australian Agricultural products, including barley, beef, cotton, lamb, lobsters, timber and wine. They also included coal, but not iron ore. China stopped accepting coal shipments, leaving ships containing hundreds of millions of tonnes of coal stranded off China's coast. Late last year we had more sagas with Australia blaming a China navy vessel of injuring Australian divers with sonar blasts. China yesterday blamed the incident on Japan. So all in all, Australia is attempting desperately to ween itself off relying on China as its biggest trading partner and I'm guessing this is in cahoots with America and Europe and UK. China at present has a stranglehold on Rare earths and battery metals processing, also their steel industry is formidable. China relys largely on Australia for cheap iron ore, there is also South America (VALE) but freight rates and times work in Australias favour. China is also a large aluminium producer but much of Chinese aluminium is not for export and used on internal consumption. China somehow seems to have control of lithium prices but not iron ore but it's not through lack of trying. China is the world’s largest consumer of iron ore spending about $US180 billion on iron ore imports, feeding the roughly 500 steel mills in China, which each was responsible for buying its own raw materials. In contrast, iron ore supply is highly concentrated with the iron ore majors dealing with smaller Chinese buyers on an individual basis. in 2022, China formally established the China Mineral Resources Group (CMRG), a company which became China’s central purchaser of iron ore with the stated aims of centralising iron ore demand, tightening control over the global steel markets and giving Chinese steel producers more bargaining power over prices. The goal for CMRG is to be the sole Chinese channel for buying imported iron ore from third parties across the globe, by assuming broad responsibility for raw materials supplies to the country’s sprawling steel industry, which absorbs about 70% of global production (mostly from Australia).
China’s US$6.3 tril stock sell-off is getting uglier by the day By Abhishek Vishnoi & Charlotte Yang / Bloomberg 19 Jan 2024 (Jan 19): Chinese stocks just capped another dismal week, with a gauge of mainland firms listed in Hong Kong languishing at the bottom of global equity index rankings for the year so far. Grim milestones have kept piling up in recent days: Tokyo has just overtaken Shanghai as Asia’s biggest equity market, while India’s valuation premium over China has hit a record. Locally, a meltdown in Chinese shares is wreaking havoc on the nation’s asset management industry, pushing mutual fund closures to a five-year high. The Hang Seng China Enterprises Index has already lost 11% in 2024. Coming after a record four-year losing streak, the slump is reinforcing a structural shift that’s seeing everyone from active money managers to passive funds turn their back on the world’s second-largest stock market. In all, some US$6.3 trillion (RM29.73 trillion) has been wiped out from the market value of Chinese and Hong Kong stocks since a peak reached in 2021, underscoring the challenge that Beijing faces as it seeks to arrest a decline in investor confidence. Authorities have ruled out the use of massive stimulus to revive the flagging economy, leaving traders wondering when things will improve. “What we are seeing this year so far really is a continuation of what we saw last year,” John Lin, AllianceBernstein’s chief investment officer of China equities, said in an Jan 17 interview on Bloomberg TV. “These squeezing-the-toothpaste type of stimulus policies so far haven’t been able to turn around the underlying bottom-up fundamentals of areas like the property sector.” ‘Waiting game’ The HSCEI gauge plunged more than 6% this week and is on track to record its worst January performance in eight years. On the mainland, the CSI 300 Index has dropped in nine of the last 10 weeks. Signs that state funds likely bought exchange-traded funds and a decision by China’s largest brokerage to suspend short selling for some clients failed to halt the onshore benchmark’s losing run. The headwinds buffeting the market are well documented: China’s real estate sector remains a trouble spot, deflationary pressures are building and a long-running feud between Beijing and Washington refuses to go away, with the US election set to take place later this year. In recent days, uncertainties about the trajectory of US interest rates and the threat of an imminent blowout of local stock derivatives have added to investor worries. Asian fund managers have cut their allocation to China by 12 percentage points to a net 20% underweight, the lowest in more than a year, according to the latest Bank of America survey. Managers of benchmark-tracking funds have sold a net US$300 million of shares traded in mainland China and Hong Kong this month, according to a Morgan Stanley analysis. That’s a reversal from the last half of 2023, when they bought US$700 million on a net basis even as stock indexes declined. “China is a waiting game and we continue to be waiting,” said Mark Matthews, head of Asia research at Bank Julius Baer & Co, which is mostly avoiding Chinese equities. Beijing’s efforts to reassure investors have been met with scepticism from investors, many of whom worry that authorities are behind the curve. While the People’s Bank of China took steps last month to pump cash into the financial system, it bucked widespread expectations for cutting a key policy rate on Monday. Speaking to leaders at the World Economic Forum this week, Chinese Premier Li Qiang trumpeted his nation’s ability to hit its roughly 5% growth target for 2023 without flooding the economy with “massive stimulus.” Right now, the loss of confidence is so severe that even attractive valuations are of little help. The MSCI China Index has never been this cheap versus the S&P 500 gauge from a forward earnings estimate perspective. Still, bets on a short-term rebound have failed to materialise. “The government seems very sanguine about the economy,” said Xin-Yao Ng, an investment director for Asian equities at abrdn. “The market might not even trust the 5% growth figure, it certainly has a much more negative view on the economy and definitely believes Beijing needs a big fiscal response.”
Re ASX, ATM I don't know which theme to swing trade. Crypto and uranium are coming off the boil. Coal and Mining related stocks are cold. Lithium in the deep freeze. Fintech overcooked, beside I don't trust this sector, that's just me. Technology stocks are pretty pathetic on ASX imo and Technology ETF's a bit overcooked, I'm not too keen to chase these atm. Copper and gold - blah! Healthcare seems like the only thing atm, I noticed PNV popped yesterday. Iron Ore & Energy, ho hum atm. I think just sit on hands.
Mick, are Malaysia stocks high commission and hard to trade? Interesting chart. https://finance.yahoo.com/quote/5246.KL/
Eeerrrrr, dunno anything about Malaysia trading. I just stick to ASX. I had one of my ASX stocks delist and go onto US bourse recently after the limit order wasn't completely filled, now I've got a nightmare with US tax department wanting me to register with them. I just want a simple life, not overseas bourses and taxation.
Yes, plus needing another account lot of paperwork and hours of labour along with accountant to handle. For a retail trader, taxation over two countries is not worth it, especially considering if I really wanted to trade foreign stocks, my already high brokerage fees go even higher.
I'm optimistic / hopeful, we have hit bottom on Lithium right here. Lithium stocks have seen carnage the past 2 years. From a technical perspective it's too early to tell where we are, there is certainly no buy signal yet on lithium but, fingers crossed....