Goldman Sachs Group Inc said clients should exit a bet that Hong Kong-listed companies in China would gain, as UBS AG and Citigroup Inc cut growth forecasts for the world’s second-biggest economy.
“We are closing our recommended long position in Chinese equities” after the trade lost 5 percent, Goldman analysts, including Noah Weisberger, wrote in an e-mailed report dated Monday. In a Nov. 6 report, the analysts favored shares in the Hang Seng China Enterprises Index
Chinese Premier Wen Jiabao’s (溫家寶) crackdown on property speculation is damping home sales and construction just as Europe’s sovereign-debt crisis threatens exports. The central bank triggered speculation that monetary policy might be further loosened to spur growth by allowing reserve requirements for some rural credit cooperatives to fall this month.
GDP will increase 8 percent next year, less than a previous call of 8.3 percent, Hong Kong-based economist Wang Tao (王濤), of UBS, said in a note yesterday. Citigroup cut its forecast to 8.4 percent from 8.7 percent. The banks have also reduced global growth estimates.
“We think the balance of risks is no longer attractive,” the Goldman analysts wrote in the report, referring to their previous stock call.
The Hang Seng China Enterprises Index, a gauge of 40 mainland companies listed in Hong Kong, dropped 9.7 percent from Nov. 5 through Monday on concern that Chinese growth may falter. It climbed 1.8 percent as of 2:40pm local time yesterday.
China’s economy grew 9.1 percent in the third quarter from a year earlier. Expansion has slowed from 11.9 percent in the first quarter of last year.
“Much weaker eurozone growth will affect the rest of the world, including China,” UBS economist Wang said. “We think more obvious and persistent easing will likely occur in the first quarter of 2012, when export, construction and industrial production should have decelerated significantly.”
Morgan Stanley on Monday lowered its China growth estimate for next year to 8.4 percent from 8.7 percent. The nation is unlikely to be immune from weaker external demand although domestic demand will “hold up well,” Hong Kong-based economists led by Helen Qiao (喬虹) and Yuande Zhu (朱元德) said in a note.
“We think a sharper deceleration in property investment is the biggest risk to China’s economy,” Johanna Chua (蔡真真), Hong Kong-based chief economist for Asia at Citigroup, said in a report yesterday.
“But a hard landing can be averted in the near term with sufficient policy flexibility to provide offsetting support for growth, especially on the fiscal front,” she said.
Wang said the government might relax fiscal policy and bank lending quotas next year. She estimated additional fiscal spending of about 1 percent of GDP over a 12-month period and that the central bank would raise its new lending target for next year to 8 trillion yuan (US$1.25 trillion) from 7.3 trillion-7.4 trillion yuan this year.
Citigroup said the central bank might cut banks’ reserve requirements before the Chinese New Year in late January, if recent capital outflows continue, and raise interest rates to stabilize deposits.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day