2015-08-01

Shenzhen Home Prices Jump 9% in July, up 25% YoY

CREIS puts out the 100-city real estate report in a nice big format now and you can see prior month's data as well. You can Google Translate the site if you can't read Chinese.

To the left in red are the 100-city average numbers: 0.54% increase in new home prices in July, down 1.38 percent yoy.

7月百城住宅均价:环比上涨0.54% 同比下跌1.38%

Google Translated link: 100-City July Home Prices

Charts Galore

2015-07-31

Fully Automated Factory in Dongguan Increases Productivity 162.5%, Cuts Defects By 80%

Tech Republic:Chinese factory replaces 90% of humans with robots, production soars
There are still people working at the factory, though. Three workers check and monitor each production line and there are other employees who monitor a computer control system. Previously, there were 650 employees at the factory. With the new robots, there's now only 60. Luo Weiqiang, general manager of the company, told the People's Daily that the number of employees could drop to 20 in the future.

The robots have produced almost three times as many pieces as were produced before. According to the People's Daily, production per person has increased from 8,000 pieces to 21,000 pieces. That's a 162.5% increase.

The increased production rate hasn't come at the cost of quality either. In fact, quality has improved. Before the robots, the product defect rate was 25%, now it is below 5%.

Average Worker Needs 85 Years of Savings to Buy Home In Shenzhen


iFeng: 距离买房你还需要多少年?

China's Coming For the Short Sellers

Reuters: China watchdog extends pursuit of short sellers to HK, Singapore - sources
China is pressing foreign and Chinese-owned brokerages in Hong Kong and Singapore to hand over stock trading records, sources said, extending its pursuit of "malicious" short sellers of Chinese stocks to overseas jurisdictions.

...It is common for regulators to request information from their overseas counterparts that may aid investigations at home. But it is highly unusual for the CSRC to seek information from offshore and international brokers directly, one source in Hong Kong said.

...The sources said the CSRC was focusing on trading positions taken through both the Shanghai-Hong Kong Stock Connect trading link and via offshore-listed products that track mainland stocks, including index futures and exchange traded funds (ETFs).

"There have been a number of questions over the past two weeks. They are going after any type of trading activity that has a reference to China," said an executive at an international brokerage based in Hong Kong.

One source at a mainland brokerage in Hong Kong said they had received enquiries over the phone directly from the CSRC seeking evidence of "naked shorting" - when an investor tries to profit from falling prices of a given stock without actually owning the shares necessary to complete the transaction, a practice that is restricted in most markets.

"We immediately said we have no clients doing 'naked shorting,' but they didn't believe us. They asked for our records on trades through the Shanghai-Hong Kong Stock Connect and records of short-selling index futures via QFII and RQFII."

Bloomberg: China Market Manipulation Probe Targets Spoofers After Crash
Spoofing has become the latest target in China’s campaign against stock-market manipulation after a $3.5 trillion selloff.

The practice, which involves placing then canceling orders to move prices, is suspected in 24 accounts on the Shanghai and Shenzhen stock exchanges, the China Securities Regulatory Commission said on its microblog. The bourses have restricted the accounts and regulators are investigating program traders, who have recently had an “obvious” impact on the stock market, the CSRC said.

China’s focus on spoofing follows a probe of “malicious” short selling, part of the government’s unprecedented effort to shore up investor confidence after a 29 percent tumble in the Shanghai Composite Index from its June high. Spoofing entered the popular lexicon this year after U.S. prosecutors said a London trader’s use of the strategy contributed to the flash crash in May 2010, when American equities briefly lost almost $1 trillion of value. The Shanghai Composite sank 8.5 percent on Monday, its biggest rout since 2007.

“The public isn’t happy about the market plunge so the regulator needs to take some actions as a response, and that’s part of the government’s plan to prop up the market,” said Zhang Haidong, the chief strategist at Jinkuang Investment Management in Shanghai. “Whether it’ll be effective remains to be seen.”

...Spoofing “works on the way up and the way down, so it’s interesting it’s only a problem when it causes equity prices to fall,” Every said. “I don’t think this changes the fundamental dynamic that price-to-earnings ratios are unrealistically high in a slowing economy where there are concerns over profits.”
This applies in more ways than one:

Thou hypocrite, first cast out the beam out of thine own eye; and then shalt thou see clearly to cast out the mote out of thy brother's eye.

Breakdown of Law and Order in Europe

Europe is coming apart, as nations cannot control their borders and point fingers at each other for a migrant crisis that exists solely because they refuse to defend their borders. French protests have added to the chaos and turned Calais into a warzone of lawlessness.

Express: Calais goes UP IN FLAMES: Migrants fight to get into UK as ferry workers block harbour

“For lorry drivers trying to get to the UK it’s like a warzone. You’ve got people who have made in many cases very long and dangerous journeys to try to get to the UK who will stop at nothing to try to get on board.

“We recognise it’s a humanitarian crisis and a complex global situation and that these are human beings, but drivers’ lives are being put at risk by people who are so desperate they have no concern with their own safety and welfare and probably even less for the safety and welfare of the drivers.

“We are very, very concerned about the safety of our drivers and we fear it’s only a matter of time before someone is seriously injured or killed.”
Migrants have already made it to Europe, why do they keep going to the UK? They aren't refugees, since refugees stop once they get across the first safe border.

Guardian: The Calais migrant problem: a continual drip of poison in Anglo-French relations
French public opinion is deeply sensitive to the impact on Calais and the recent migrant deaths. No one knows this better than the Socialist interior minister, Bernard Cazeneuve, who was MP for Cherbourg, which has its own migrant problems along the coast. With the far-right Front National’s Marine Le Pen running in regional elections in the newly expanded Calais region this winter, the Calais question is likely to dominate local French politics all year.
The odds of the EU political project surviving are shrinking. If the EU does survive, it might be because UKIP, National Front, AfD, Law and Justice, Sweden Democrats, Northern League, Finns, Fidesz, et al are the majority parties.

Return of the Market

Now is your last chance to resign from your high profile job at a central bank.
Thailand: Bye Bye Baht If Bank Of Thailand Cuts Rates Again
How independent is the Bank of Thailand really? The central bank may be tempted to cut rate again to encourage growth. “Drag from mainstream Asia and European demand for goods is outweighing the positive impact from Chinese tourists and goods demand from Frontier Indochina,” wrote Teather. This is not a consensus view according to economists surveyed by Bloomberg, however. Most expects the central bank to stay put.

Chinese Want North American Real Estate


Juwai.com

More Governments Cancel 9070 Policy

The 9070 policy was implemented by the central government in 2006. It says 70% or more of real estate developments must be made up of 90 sqm or smaller apartments. Nanjing was even tougher with a 9050 policy.

July 29, Nanjing Land Bureau hang out seven plots, three plots of residential properties with the cancellation of the "9050" dwelling size limit.

Nanjing is not the first country to cancel housing supply of copy hard targets city.

By the 21st Century Business Herald reporter to incomplete statistics, Tianjin, Hangzhou, Qingdao, Sichuan, Jiangxi, Henan, Fujian and other provinces and cities over 10 explicitly canceled the housing supply dwelling specification limits.

Honorary Vice President of the HS Zhu, one opinion, "9070" is no hard and fast rules to optimize the real estate market, to market the units, one of the measures decided buyers, also in line with current trends.

It should be noted that the market has begun to show different dwelling area of ​​housing options to Shanghai, for example, according to the China Index Research Institute, 2014, 90-120 square meters Unit volume accounted for 33%, replace 70-90 square meter apartment Transacted, becoming the largest proportion of units traded.
This shift was expected earlier this year, see China Begins Round 3 of Housing Rescue, Market Deregulation

iFeng: 楼市调控再去行政化:多地解禁“9070政策”

2015-07-30

Chinese Insurance Companies Buying Overseas Real Estate to Hedge Yuan Depreciation Risk


iFeng: 对冲人民币贬值预期风险 保险公司加码海外地产
Chanson capital Executive Director Shen Meng told the 21st Century Business Herald reporter said that under the "RMB devaluation expectations and future domestic investment product yield is not ideal backdrop, insurance companies choose to invest in overseas earnings and stable real estate, can be better managed insurance funds."

China Rushes More Funds to Market

China's PPT was rushing to deploy 120 billion yuan of capital before 9 AM, and WMP funds directed into the stock market is believed to be 200 billion yuan.

200 billion financial products will become the maintenance of stability force

From today's news perspective, the approval of China Securities Regulatory Commission, China Securities Industry Association yesterday also issued a "OTC securities business record management", the formal implementation since September 1, 2015. The original "private securities company product record management" abolished from the date of implementation of this approach.

According to the previous arrangement Securities Association, the Securities Industry Association in August began to accept securities from outside the company access to information systems evaluation and certification applications. "OTC securities business record management" means that external access to information systems evaluation and certification are under way.

According to a number of brokerage mechanism is expected, since early June, waiting for an external system the size of the record of financial products reached about 200 billion, an evaluation and certification and approved by the market, the market will become another force.
I would not be a buyer of a PPT WMP.

iFeng: 1200亿“国家队”基金今日9点前火速成立
iFeng: 国家队援军何止1200亿定制基金 场外2000亿整装待发

Now It's A Financial Crisis; Most Important Goal For Investors: Survive

Below is written by Guan Qingyou, executive director of Minsheng Securities' research institute, and researcher Zhu Zhenxin, after sitting through the recent Politburo meeting at Beidaihe.

2015 is the year China is face to face with the financial crisis. In 2009, the government launched a 4 trillion yuan stimulus. In 2012. it rescued the real estate market. In 2014, it used the stock market to rescue the economy. Now, it faces a real financial crisis. After the 626 Earthquake (June 26 market crash) stock market crisis, the Chinese economy is gradually feeling more pressure.

We can help themselves in the past, the future is not the same as we can? We believe that: first, the results may no different, that is to say, the Chinese economy can once again saved the day, because, as a not fully market-oriented economy, China has no reason to market disorder crisis erupted. Second, this process is far from simple imagination, decision-makers must not be taken lightly, because this is not the same. In the past we have sufficient policy space, infrastructure, real estate, export, stock market, you can add one by one lever, but now they have gradually been overdrawn, plus lever next subject seem yet to come. Finally, if you want to save the day, you may need a different extraordinary measures in the past, which may be QE, there may be more daring measures.

For decision-making is, before the various contradictions and dilemmas: to make anti- inflation (pig cycle driven by CPI upward), but also anti-deflation (PPI overcapacity led to downward), both to wide currency, falling interest rates, insurance growth, but also stable currency, stable exchange rate , risk prevention. On the market, although Earthquake has gradually gone, but the alarm is far removed. For investors, under a gentleman does not stand Weiqiang, when the future is unclear, the most important thing is to survive.

iFeng: 政治局会议释放四大信号:与金融危机正面决战

Political Revolution Comes to America Via Immigration Issue

In 2012, I wrote: Immigration restrictions coming in the United States
Immigration restriction will be one of the key issues that delivers a true outsider politician into power. The only thing surprising about it will be how late it arrives and possibly how sharp a break with current policy it makes. Politicians continue to overwhelmingly hold the extreme "peak social mood" view, a position that was extreme in and of itself at peak social mood, but becomes insanely extreme politically as social mood declines. They are very far away from public opinion, leaving a gaping hole for the first ambitious politician who decides to make immigration restriction an issue.

In 2013: Immigration Amnesty Takes Its Last Breath
One of things I've repeated on immigration is that the U.S. is proceeding as if this is still the year 2000, at the peak of social mood. The tide has been turning politically, but they continue to act as if nothing has changed. Here we see President Obama and NY Senator Schumer assuming they can get more for their side, effectively killing a deal in the House. The House Republicans are the stumbling block on immigration reform and if social mood had crept more into DC, they would refuse any deal and simply wait it out, since their side is gaining support year after year. Instead, a deal was on the table and the pro-amnesty side killed it because it wasn't good enough. Now with Obama weak due to Obamacare and the 2014 election suddenly looking good for the GOP, this may have been the last shot at immigration reform on pro-amnesty terms.

Last year I wrote Immigration Issue Set to Explode in America; Prepare for Political Volatility:
UKIP was a distant warning shot. The defeat of Eric Cantor was a much closer shot. Few if any politicians have stepped up to advocate an immigration restriction policy. They have nearly all taken the easy road of bashing President Obama for inaction. This leaves an opening for an ambitious politician.
That last link goes to a story on Donald Trump.

The mainstream of both political parties is still tut-tutting about Trump. They think immigration restriction of any kind, including the deportation of illegal aliens, is an unacceptable position. They will go to their political graves on this issue. The United States is on the verge of catapulting past Europe and Australia on the immigration issue, squeezing a change that took 15 years in those countries into a single election.

The political mainstream still has no idea about immigration because the media and government suppress information on the topic. Majorities of almost every single group in America want immigration reduced, yet if you asked most people what the polls say, they'd say Americans favor immigration. The polls are a literal fabrication based on leading questions, the data show that restricting immigration is the winning political position.

The national question, 2014
The only two subgroups with positive IEQs are Asians and foreign-born residents living in the US (read immigrants), and there is of course a lot of overlap in these two categories. Perhaps uniquely among major contemporary political issues, there is a pronounced divide between old (black and white) America on the one hand and new (Asian and Hispanic) America on the other.
The IEQ is the "immigration enthusiasm quotient." Every other group is neutral or wants immigration reduced.

This is no surprise to myself or anyone who digs into the data: Internal Poll Shows Donald Trump Generating Strong Support Among Minority Voters – “LANDSLIDE”
“It’s still hush-hush, but enough mouths are moving to make it credible. It apparently started with some Florida numbers by the leading candidate down there. They had been warned their numbers were slipping and the campaign decided to confirm. They received more than confirmation. What they came back with were numbers that elevated Donald Trump’s support among minorities beyond anything they thought was possible. This initiated an order of three more internal polls of other battleground states and the results were very similar – Donald Trump is making significant gains across the board with minority voters. In just two months he has done what Republicans have been crying about doing for the last several years. It’s remarkable. It also means the media, who likely already knows about the polling data, will be throwing everything they can at the Trump campaign to topple it once and for all. They cannot allow a candidate who is overturning all of the established rules of what a Republican is and isn’t. Democrats want him gone. Republicans want him gone. The only ones who appear to want him to stay is a growing number of supporters representing a surprisingly large percentage of the American public.”
Donald Trump isn't a political genius. I believe his line about Mexico not "sending their best people" was basically a gaffe, but like UKIP in the UK, Trump isn't a dummy. He's tapped into the winning issue of the 2016 campaign and this election is now Donald Trump's to lose unless another major candidate pushes further to the right on immigration.

A Democrat is already moving right, socialist candidate, Bernie Sanders, who can read a poll:
Ezra Klein: You said being a democratic socialist means a more international view. I think if you take global poverty that seriously, it leads you to conclusions that in the US are considered out of political bounds. Things like sharply raising the level of immigration we permit, even up to a level of open borders. About sharply increasing ...

Bernie Sanders: Open borders? No, that's a Koch brothers proposal.

Ezra Klein: Really?

Bernie Sanders: Of course. That's a right-wing proposal, which says essentially there is no United States. ...

Ezra Klein: But it would make ...

Bernie Sanders: Excuse me ...

Ezra Klein: It would make a lot of global poor richer, wouldn't it?

Bernie Sanders: It would make everybody in America poorer —you're doing away with the concept of a nation state, and I don't think there's any country in the world that believes in that. If you believe in a nation state or in a country called the United States or UK or Denmark or any other country, you have an obligation in my view to do everything we can to help poor people. What right-wing people in this country would love is an open-border policy. Bring in all kinds of people, work for $2 or $3 an hour, that would be great for them. I don't believe in that. I think we have to raise wages in this country, I think we have to do everything we can to create millions of jobs.
Bernie Sanders is to the right of Trump on immigration, if he follows up these statements with policy. With Hillary's campaign mired in scandal, it could be that two immigration restrictionists face off in 2016.

Meanwhile, in a development that has no connection to Trump, but is connected to political discontent, the young and Internet savvy right-wing is beginning its assault on the mainstream GOP. The end of Boomer dominance is at hand and the ascendance of the Generation X and Y is beginning. It heralds a shift so far to the right that it cannot be evaluated on the scale of years or decades, but centuries. It's beginning with a bit of humor though:

‘Cuckservative’ — the conservative insult of the month, explained
‘CUCKSERVATIVE’ IS A GLORIOUSLY EFFECTIVE INSULT THAT SHOULD NOT BE SLURRED, DEMONISED, OR RIDICULED
Thus, “cuckservative” can mean many things. It could mean conservatives who are afraid of social exclusion and kowtow to the liberal media establishment. It could mean conservatives who play the left’s game of identity politics, accusing their internal opponents, such as Donald Trump, of being racist or sexist or rapey for spurious or opportunistic reasons.
Cuckservatives are the right-wing politicians who shoot at their own side, implement policies the base hates and engage in self-destructive policies such as mass immigration, which guarantees the destruction of America's right-wing as it exists today.

The entire right-wing is beginning a major rightward shift in a youth driven movement that has been percolating on the Internet for the better part of a decade. I touched on the movement in 2013: Rise of the New American Right Leaking Into Mainstream; What is Neoreaction?
The movement has no central core, and the article correctly notes that there's cross pollination between game blogs that help men meet, date and have successful relationships with women (by throwing out all the feminist ideas); scientists who study taboo subjects such as the biological basis for human traits such as intelligence; technology entrepreneurs and workers who are thinking of and building libertarian systems (Bitcoin being a recent and popular creation); the old paleoconservative right and libertarian right, where Pat Buchanan and Ron Paul both find little love from establishment Republicans; and through the medium of the Internet, where it is now possibly to read books by the losers of history (the critics of democracy). The latter point is important because even if one doesn't agree with neoreaction, it is digging up lot of ideas left for dead that are not even debated anymore. This makes the movement very well read and its opposite mostly unread, relying on power instead. Neoreaction is an elite movement, and it was only yesterday that I linked to Blame Rich, Overeducated Elites as Our Society Frays.
Neoreactionaries aren't fueling the current push, but their ideas are in the background of the movement. A major political realignment has been underway for more than a decade across the developed world, but it was slow in Europe and "hidden" on the Internet in America, so people ignored it or had no idea it existed. What's about to happen in America will make it clear to all.

Fanya Collapse Could Embroil Banks

FT: China protests over Fanya liquidity freeze could spread to banks
Online notices indicate the products were marketed through Bank of China branches in Aksu, Xinjiang, and in Hangzhou, a prosperous city in the Yangtze Delta. The products were also marketed through other banks, according to material from Fanya Metal Exchange’s website and former salespeople.

Chinese bank branches will sometimes handle deposits for unaffiliated financial products or allow them to be marketed on premises without officially endorsing them. Former salespeople for Fanya investment products described the banks as third-party custodians.

That distinction is not always clear to retail investors. In some past cases when wealth management products gone awry, regulators have insisted that the bank accept some responsibility. Bank of China declined to comment.

The Fanya Metal Exchange’s use of normal banking channels to market its products could mean its troubles have broader systemic effects, if banks are held responsible by regulators.

“We can’t comment on Fanya because they are not under our jurisdiction,” the Yunnan securities regulator said on Tuesday. Asked about the redacted report, the regulator said it was “normal information release by us”.

Seeds of New Housing Bubble Sprouting

Only six months ago, China was worried about falling home prices and deflation. Deflation is still a concern at the higher stages of production, which for central planners, calls for money printing. Already we're seeing the problem of money printing as a solution: the money isn't spread evenly throughout the economy, but instead is flowing into a nascent housing bubble in first-tier cities.

Beijing's supply-demand in housing has been permanently imbalanced. For a brief period last year, supply outstripped demand. Now demand is outstripping supply once more, threatening out of control price rises again. Sales in June hit a 17-month high.

Second quarter housing supply from 45 projects (not including public housing projects) came to a little over 12,000 apartments, down 50% from 2014. Sales were over 15,000 units. In July, there were about 3800 new homes; sales are 6400 units thus far.

There is real concern prices could start taking off.

iFeng: 京住宅成交创新高 供需不平衡房价或将上行

This next article says the second half will see a rate cut and two RRR cuts, quoting Zhu Haibin, chief China economist at J.P. Morgan.

iFeng: 下半年或迎一次降息两次降准 楼市或有大变

Less discussed are soaring rents. The apartment I was renting in Beijing was 2600 a month in 2011. I believe it is now over 4000 a month. That's not atypical for the area.

Central planners look smart when things are going well because the economy's natural momentum does most of the work. When balancing on a beam, or spinning a basketball on your finger, you use very little effort when in equilibrium. Once you start losing your balance, you get farther and farther out of equilibrium and must add more and more energy to return, or find a new equilibrium. Most of the time, the new equilibrium in on the floor, at rest.