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Sancho Panza

Australia:more Slowdown Fears As China's Trade Slumps As It Cuts Vehicle Sales.

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http://www.smh.com.au/business/more-slowdown-fears-as-chinas-trade-slumps-20130710-2pqmu.html

'A surprise fall in China's imports and exports has signalled a further slowdown in the world's second-largest economy, spelling possible short-term risks for Australia.

Exports for Australia's largest trading partner fell 3.1 per cent in June from a year earlier, while imports declined 0.7 per cent as China warned of a "grim" outlook. The figures were far from analysts' expectations of a rise in exports and imports.

China's trade surplus widened to $US27.1 billion ($29.5 billion) from $US20.4 billion in May, while iron ore imports slowed to 6.8 per cent growth year-on-year.

"It was a big disappointment," JPMorgan chief economist Stephen Walters said.

"We're not talking about abrupt slowdowns, but clearly the numbers today were pretty soft."

The Australian dollar fell about US0.70¢ to US91.26¢ after data was released. It rebounded and was buying US92.10¢ late on Wednesday.

The weaker data, which followed a central government crackdown on over-invoicing, came as a private survey found Australian consumer sentiment remained steady in July.

It also came ahead of Thursday's much-anticipated jobless figures for June. The unemployment rate in Australia is forecast to rise by 0.1 per cent to 5.6 per cent last month amid a slower-than-expected transition away from mining-led growth.

Economists said the decline of exports and imports, the first time since October 2009 and excluding distorted figures during Chinese New Year, underscored the weakness of external and domestic demand conditions.

But he warned against being "too downbeat", as improving conditions in some of China's biggest export markets, such as Japan, Europe and the US, meant there would be sufficient demand for Chinese products in those countries down the track.'

6 days ago.

http://www.scmp.com/business/economy/article/1275602/scrutiny-gets-harder-china-suspends-pmi-data

'Beijing has suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers, with an official saying there was limited time to analyse the large number of responses.

"We now have 3,000 samples in the survey, and from a technical point of view, time is very limited - there are many industries, you know," Cai Jin, vice-president of the China Federation of Logistics and Purchasing, which compiles the data with the National Bureau of Statistics, said yesterday in Beijing.

The disappearance of data on industries including steel adds to issues hampering analysis of the world's second-biggest economy, after fake invoices inflated trade numbers this year.

The Purchasing Managers Index also omitted readings on export orders, imports and inventories without any explanation from the government.

"Suspension of the monthly data, without prior notice, makes the research work difficult for us," said Xu Xiangchun, a steel researcher and chief analyst at Mysteel.com

"The random absence of official data is disorienting."

The industry-specific PMI readings have only been available via paid subscription, while the broader data is issued via press releases.

The logistics federation increased the number of companies in its manufacturing survey to 3,000 from 820 starting with January's reading and also regrouped industries into 21 categories from 31. The latest release referred to 31 industry groups.

Less information makes it more difficult to assess the magnitude of an economic slowdown at risk of deepening because of a cash squeeze in the interbank market that sent borrowing costs soaring last month.

A person involved in producing PMI data on the mainland's steel industry said the release was suspended after the statistics bureau decided to change how the figures are compiled.

It is not yet clear what changes will be made and in what time frame, or if the data for this month will be released next month, said the person, who asked not to be identified.'

It doesn't exactly instil a great deal of confidence in either the Chinese or Australian growth story.Especially when the Chinese impose restrictions on vehicle sales.

http://www.reuters.com/article/2013/07/11/us-china-autos-idUSBRE96A06E20130711

(Reuters) - Eight more cities in China, the world's biggest auto market, are likely to announce policies restricting new vehicle purchases, an official at the automakers association said, as Beijing tries to control air pollution.

Shi Jianhua, deputy secretary general at the China Association of Automobile Manufacturers (CAAM), did not give details on the new measures and there has been no word from the government.

But the industry group warned the planned restrictions could cut vehicle sales by 400,000 units, equivalent to 2 percent of annual domestic sales in 2012.

In June, sales of German cars accounted for 26 percent of total sales in China, followed by Chinese vehicles at 25 percent, Japanese with 18 percent and U.S. cars with 16 percent, according to CAAM data.

Four Chinese cities - Beijing, Shanghai, Guiyang and Guangzhou - already restrict vehicles on the road by using auctions and lotteries to sell a limited number of license plates.

The new curbs will likely include major provincial centers like Chengdu, Chongqing and Wuhan, Shi said.

Analysts said CAAM's prediction on the possible impact of the new curbs may be an exaggeration and aimed at lobbying the government against such changes.

"I don't think eight more cities will suddenly implement curbs at the same time, especially when China's economy is facing downward pressure and the central government is encouraging domestic consumption." said Wu Wenzhao, analyst at Sinolink Securities.

The new Chinese leadership under president Xi Jinping has made improving the quality of life for Chinese citizens a centerpiece of policy, but stubborn air pollution has become an example of the challenge Beijing faces.

Last month, the State Council, or China's cabinet, approved a slew of measures to combat air pollution, including accelerating the installation of pollution control equipment on small, coal-fuelled refineries and curbing the growth of high-energy-consuming industries like steel, cement, aluminum, and glass.

The government has made similar promises over the last decade, but enforcement has often been lacking, especially at the local level.

Chinese cities rank among the most polluted in the world, and smog clouds over eastern China, visible from orbit, are easily found online.

Chinese air pollution is driven by many factors, in particular by the country's dependence on coal-fired power plants, but particulate pollution has been aggravated by a culture that has passionately embraced the automobile as a symbol of status.

The possible restrictions on new vehicle purchases come at a time when automakers are bracing for another tepid year of growth in a market that has been hit by a slowing economy as well as rising fuel costs.'

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I don't understand the reference to auto sales. I was in Australia in April and they had just rolled out yet another multi-squillion hand out for the ailing Aussie car makers. GM, I think. All the comment on the TV was that the domestic market wasn't brilliant, imports were scooping up sales because they were better/cheaper and they exported two tenths of FA.

As for the Chinese steel industry, this pretty much sums it up http://www.economist.com/news/business/21580458-worlds-overcapacity-steelmaking-getting-worse-and-profits-are-evaporating-inferno

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I read somewhere that Chinese export figures dont tally with Chinese imports into other Countries figures.

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I don't understand the reference to auto sales. I was in Australia in April and they had just rolled out yet another multi-squillion hand out for the ailing Aussie car makers. GM, I think. All the comment on the TV was that the domestic market wasn't brilliant, imports were scooping up sales because they were better/cheaper and they exported two tenths of FA.

As for the Chinese steel industry, this pretty much sums it up http://www.economist.com/news/business/21580458-worlds-overcapacity-steelmaking-getting-worse-and-profits-are-evaporating-inferno

Sounds similar to what happened to our own once booming car manufacturing market.....priced out by others selling something just as good or better for less......still we have got our financial, insurance and service industries as a very profitable replacement, so no worries. ;)

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Australia's Waning Boom Saps Mining Area Housing Demand

By Nichola Saminather - 2013-07-21

...Prices in mining regions could fall as much as 30 percent from a first-quarter peak, real estate-data company SQM Research Pty forecasts.

http://www.bloomberg...ing-demand.html

...

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I don't understand the reference to auto sales. I was in Australia in April and they had just rolled out yet another multi-squillion hand out for the ailing Aussie car makers. GM, I think. All the comment on the TV was that the domestic market wasn't brilliant, imports were scooping up sales because they were better/cheaper and they exported two tenths of FA.

I spent a year in Oz twenty years ago. The adverts for consumer goods including cars used to make me laugh. They would often emphasise the fact they were imported rather than being made in Australia. I remember one car advert referring to "real imported quality" - with a picture of the cars being transported on a ship in case the message wasn't clear.

Edited by oldsport

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I read somewhere that Chinese export figures dont tally with Chinese imports into other Countries figures.

I can't give you any concrete evidence of this, but here's something to think about:

Why do investors and economists around the world actually believe the figures produced by this state? People that live in China don't believe the news issued by the state, so why would we?

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I can't give you any concrete evidence of this, but here's something to think about:

Why do investors and economists around the world actually believe the figures produced by this state? People that live in China don't believe the news issued by the state, so why would we?

South China Morning Post 9/6/13

'Growth in Chinese exports fell sharply last month, but that's not all bad news, according to analysts.

They said the government's crackdown on fake invoices had helped produce a more accurate picture of the mainland's imports and exports as weak global demand continues to weigh on the world's second-largest economy.

Besides a sharp fall in growth in exports to Hong Kong, growth in exports to bonded customs area also dropped to 45.8 per cent in May from 249.4 per cent in April. Some believe mainland exporters drew in hot money by overstating export payments. They moved goods in and out of Hong Kong and bonded custom areas on the mainland, taking advantage of the higher interest rates offered on the mainland, these observers said.'

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I read somewhere that Chinese export figures dont tally with Chinese imports into other Countries figures.

Lots of it is taken to other countries and relabelled as other metals to avoid tarriffs.

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'After slashing the price of three planned townhouses by a third in the coal-mining town of Moranbah in remote northeastern Australia, agent Ricardo Baggio still can’t find buyers.

“No one’s got confidence,” said Baggio from broker Ray White Group’s Townsville franchise, about 550 kilometers (341 miles) north of Moranbah in Queensland state. “There are a few mines around the town but they’re not hiring or they’re downsizing.”

Home prices in Australia’s isolated mining towns, which outpaced increases in the rest of the nation over the past decade, are falling as companies such as Glencore Xstrata PLC (GLEN) and Peabody Energy Corp. (BTU) delay projects and lay off workers amid a slowing resources boom. The percentage of homeowners more than 30 days behind on their mortgage payments in Gladstone, a Queensland coastal town near more than $60 billion of gas projects, was 0.94 percent in March, according to Fitch Ratings, a 71 percent increase in six months.

The Moranbah townhouses, which will be built on a flat, sparsely landscaped street about 1 kilometer from the center of town, are on the market for A$525,000 ($478,485) each, down from an initial price of A$750,000, said Baggio. The median price of a home in Brisbane, the state capital, is A$425,000.

Across the country, more than 5,000 kilometers west by road from Gladstone, in the Western Australian shire of Roebourne, rents have plunged 22 percent in the 12 months to April, while the median house price has slipped 3.5 percent to A$796,000, APM figures showed. '

As ever,markets move at the margin first.These small mining towns were the leveraged play of the last decade in Australia,so it's no surprise that they're suffering now.

More surprising is the speed of the seeming drop in rental prices in some of these areas intimating that the cash price for many of the houses might be some way below current asking prices.

Edited by Sancho Panza

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  • 245 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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