There’s a silver lining to this year’s $2.5 trillion bloodbath in China’s equity market: foreigners want in.
Buying yuan-denominated shares has rarely been so easy and inexpensive for international investors, according to Bloomberg. The currency is near its weakest in 16 months and hedging against further declines is very cheap. Valuations are 16 per cent lower than when MSCI first added the shares to its indexes only two months ago, while restrictions to access have eased, daily quotas have increased and trading mechanisms have come through testing.
Mainland stocks barely feature in international portfolios, a shortfall that China’s been trying to address for years as it gradually opens its economy. Recent northbound buying shows overseas traders are hunting for value in China after the CSI 300 Index lost as much as 32 per cent in dollar terms since January. That’s increased their ownership of the mainland market to about 5.3 per cent of free float from 2 per cent earlier in the year, according to asset management firm Robeco.
“It’s given the long-term buyers a much better entry point,” said Victoria Mio, the chief China investment officer for Robeco’s Hong Kong unit. “They weren’t caught in the weakness and can afford to be a little less cautious than in January, when everything was expensive. People who were going to enter the market anyway might as well do it now.”
Foreign investors bought a net $3.7 billion of mainland shares since July 25, according to data compiled by Bloomberg based on daily quota usage. MSCI last week listed 10 more A shares it plans to add to its indexes at the end of the month, a change that will lift the weighting of mainland stocks to 0.75 per cent of its emerging-market gauge. While the proportion is still tiny, it’s another step toward attracting some of the $2tn tracking MSCI’s indexes worldwide.
Rival index provider FTSE Russell is slated to announce plans for A shares in September.
There are signs China wants to improve access for foreigners, a move that would broaden the pool of money available to support its languishing stock market. Regulators last week said they’ll ease some trading restrictions facing overseas qualified investors such as insurers, pension funds or sovereign-wealth funds. The announcement triggered a temporary rally in onshore stocks.
Fresh declines in stocks and the yuan mean the valuation case for Chinese shares is stronger than it’s been all year. A gauge of large caps, a group that comprises the majority of foreign buying, trades at only 8.4 times projected earnings, down from a multiple of 12 times in January. Relative to the S&P 500, it’s near the biggest discount in about 15 months.
“Everything has a price,” said Charles Feng, head of macro trading at Standard Chartered in Hong Kong. “At a certain point, people are going to come in and start to pick the bottom. That’s why I wouldn’t be that bearish on everything.”
Luring foreigners comes at a crucial time for China’s equity market as the country’s 142 million day traders, who drive more than 80 per cent of daily turnover, grow increasingly disheartened. But with better known companies in Hong Kong or New York also trading cheap, not all investors see the need to plunge into A shares.
“There’s value everywhere in the China space,” said Andrew Mattock, who helps manage Matthews Asia’s China funds from San Francisco. While he’s been buying H shares after the sell-off, he says he hasn’t increased A-share exposure. “There’s extreme value in Hong Kong and even expensive ADRs are getting interesting.”
Robeco’s Mio, who earlier this year travelled throughout the US, Europe, Australia, and Latin America to pitch A shares to foreign investors, said many refrained from buying because they had only just started researching China’s $5.9tn equity market. CLSA’s Alexious Lee agreed, noting there are about 3,600 companies trading on China’s main boards in Shanghai and Shenzhen. That’s more than those listed in London or Hong Kong.
“Overseas investors need time to understand the market, get to know the companies and be confident enough to position themselves beyond the top 15 stocks,” said Mr Lee, head of China capital access at CLSA. “Now is a great moment to do that.”
While foreign investors survey the scene in the world's second-biggest economy, China revealed it almost quadrupled the value of fixed-asset investment projects approved in July as Beijing looks to accelerate infrastructure spending to boost the cooling economy.
China gave the green light to 17 fixed-asset investment projects in July, worth a combined 77.69bn yuan (Dh41.27bn), Zhao Chenxin, an official at the National Development and Reform Commision (NDRC), said this month.
That compared with approvals for 20.8bn yuan of spending in June, Reuters calculated from official data.
Beijing is accelerating infrastructure spending and rolling out other support measures for businesses to cushion the economy as it braces for the impact of escalating US trade tariffs. Data last week showed China's investment growth has slowed to a record low and consumers are turning cautious on spending.
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The NDRC also said that 1.73tn yuan worth of debt-to-equity swap agreements had been signed as of end-July, although only 352bn yuan has been transacted.
Beijing has encouraged highly indebted firms to enter into such agreements as part of its sweeping, multi-year campaign to reduce risks in the financial system and a mountain of debt.
But some China watchers are now questioning whether the stream of new stimulus measures and easier credit has put Beijing's debt reduction efforts on the back burner again.
Under debt-to-equity swap schemes, investors get equity stakes in firms and in exchange the firms are able to lower their debt burden, though the specifics of each deal are different and often complex.
When asked by Reuters if the deleveraging campaign has hurt the economy, as suggested by the weak July data, NDRC official Chen Hongwan said the twin goals of sustainable economic growth and debt reduction were not mutually exclusive.
"We can't just simply say deleveraging is at odds with economic growth," he said, adding that moves such as forcing "zombie" firms to close were good for the economy and healthier companies in the long run.
However, many deeply troubled companies are state owned with many employees, raising the risk of layoffs.
While announcements of big projects are starting to come thick and fast, analysts caution they have long lead times and they may not begin to arrest the decline in China's economic growth until next year.
"The key headwinds were the same as before – slowing investment (especially infrastructure) and an ongoing unwind of shadow credit due to deleveraging measures," analysts from UBS Chin awrote in a recent note, referring to a crackdown on riskier lending which is shutting down an important source of funds for small, private companies.
Despite the eye-catching road and rail spending, economists at Nomura believe Beijing is so far proceeding more cautiously with stimulus than in past downturns.
The government is most likely saving its policy ammunition for September and the fourth quarter, after more sweeping US tariffs take effect, Nomura said in a note this week.
Crime%20Wave
%3Cp%3EHeavyweight%20boxer%20Fury%20revealed%20on%20Sunday%20his%20cousin%20had%20been%20%E2%80%9Cstabbed%20in%20the%20neck%E2%80%9D%20and%20called%20on%20the%20courts%20to%20address%20the%20wave%20of%20more%20sentencing%20of%20offenders.%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3ERico%20Burton%2C%2031%2C%20was%20found%20with%20stab%20wounds%20at%20around%203am%20on%20Sunday%20in%20Goose%20Green%2C%20Altrincham%20and%20subsequently%20died%20of%20his%20injuries.%3C%2Fp%3E%0A%3Cp%3E%26nbsp%3B%E2%80%9CMy%20cousin%20was%20murdered%20last%20night%2C%20stabbed%20in%20the%20neck%20this%20is%20becoming%20ridiculous%20%E2%80%A6%20idiots%20carry%20knives.%20This%20needs%20to%20stop%2C%E2%80%9D%0D%20Fury%20said.%20%E2%80%9CAsap%2C%20UK%20government%20needs%20to%20bring%20higher%20sentencing%20for%20knife%20crime%2C%20it%E2%80%99s%20a%20pandemic%20%26amp%3B%20you%20don%E2%80%99t%20know%20how%20bad%20it%20is%20until%20%5Bit%E2%80%99s%5D%201%20of%20your%20own!%3C%2Fp%3E%0A
Results:
First Test: New Zealand 30 British & Irish Lions 15
Second Test: New Zealand 21 British & Irish Lions 24
Third Test: New Zealand 15 British & Irish Lions 15
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Haltia.ai%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202023%0D%3Cbr%3E%3Cstrong%3ECo-founders%3A%3C%2Fstrong%3E%20Arto%20Bendiken%20and%20Talal%20Thabet%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20AI%0D%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%2041%0D%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20About%20%241.7%20million%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Self%2C%20family%20and%20friends%26nbsp%3B%3C%2Fp%3E%0A
Common OCD symptoms and how they manifest
Checking: the obsession or thoughts focus on some harm coming from things not being as they should, which usually centre around the theme of safety. For example, the obsession is “the building will burn down”, therefore the compulsion is checking that the oven is switched off.
Contamination: the obsession is focused on the presence of germs, dirt or harmful bacteria and how this will impact the person and/or their loved ones. For example, the obsession is “the floor is dirty; me and my family will get sick and die”, the compulsion is repetitive cleaning.
Orderliness: the obsession is a fear of sitting with uncomfortable feelings, or to prevent harm coming to oneself or others. Objectively there appears to be no logical link between the obsession and compulsion. For example,” I won’t feel right if the jars aren’t lined up” or “harm will come to my family if I don’t line up all the jars”, so the compulsion is therefore lining up the jars.
Intrusive thoughts: the intrusive thought is usually highly distressing and repetitive. Common examples may include thoughts of perpetrating violence towards others, harming others, or questions over one’s character or deeds, usually in conflict with the person’s true values. An example would be: “I think I might hurt my family”, which in turn leads to the compulsion of avoiding social gatherings.
Hoarding: the intrusive thought is the overvaluing of objects or possessions, while the compulsion is stashing or hoarding these items and refusing to let them go. For example, “this newspaper may come in useful one day”, therefore, the compulsion is hoarding newspapers instead of discarding them the next day.
Source: Dr Robert Chandler, clinical psychologist at Lighthouse Arabia
Getting%20there%20and%20where%20to%20stay
%3Cp%3EEtihad%20Airways%20operates%20seasonal%20flights%20from%20Abu%20Dhabi%20to%20Nice%20C%C3%B4te%20d'Azur%20Airport.%20Services%20depart%20the%20UAE%20on%20Wednesdays%20and%20Sundays%20with%20outbound%20flights%20stopping%20briefly%20in%20Rome%2C%20return%20flights%20are%20non-stop.%20Fares%20start%20from%20Dh3%2C315%2C%20flights%20operate%20until%20September%2018%2C%202022.%C2%A0%3C%2Fp%3E%0A%3Cp%3EThe%20Radisson%20Blu%20Hotel%20Nice%20offers%20a%20western%20location%20right%20on%20Promenade%20des%20Anglais%20with%20rooms%20overlooking%20the%20Bay%20of%20Angels.%20Stays%20are%20priced%20from%20%E2%82%AC101%20(%24114)%2C%20including%20taxes.%3C%2Fp%3E%0A%3Cp%3E%3C%2Fp%3E%0A
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Teri%20Baaton%20Mein%20Aisa%20Uljha%20Jiya
%3Cp%3E%3Cstrong%3EDirectors%3A%3C%2Fstrong%3E%20Amit%20Joshi%20and%20Aradhana%20Sah%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECast%3A%3C%2Fstrong%3E%20Shahid%20Kapoor%2C%20Kriti%20Sanon%2C%20Dharmendra%2C%20Dimple%20Kapadia%2C%20Rakesh%20Bedi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
UAE currency: the story behind the money in your pockets
The biog
Name: Timothy Husband
Nationality: New Zealand
Education: Degree in zoology at The University of Sydney
Favourite book: Lemurs of Madagascar by Russell A Mittermeier
Favourite music: Billy Joel
Weekends and holidays: Talking about animals or visiting his farm in Australia
MATCH INFO
Barcelona 4 (Messi 23' pen, 45 1', 48', Busquets 85')
Celta Vigo 1 (Olaza 42')
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Sholto Byrnes on Myanmar politics
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
FINAL LEADERBOARD
1. Jordan Spieth (USA) 65 69 65 69 - 12-under-par
2. Matt Kuchar (USA) 65 71 66 69 - 9-under
3. Li Haotong (CHN) 69 73 69 63 - 6-under
T4. Rory McIlroy (NIR) 71 68 69 67 - 5-under
T4. Rafael Cabrera-Bello (ESP) 67 73 67 68 - 5-under
T6. Marc Leishman (AUS) 69 76 66 65 - 4-under
T6. Matthew Southgate (ENG) 72 72 67 65 - 4-under
T6. Brooks Koepka (USA) 65 72 68 71 - 4-under
T6. Branden Grace (RSA) 70 74 62 70 - 4-under
T6. Alexander Noren (SWE) 68 72 69 67 - 4-under
Race card
4pm Al Bastakiya Listed US$300,000 (Dirt) 1,900m
4.35pm Mahab Al Shimaal Group 3 $350,000 (D) 1,200m
5.10pm Nad Al Sheba Turf Group 3 $350,000 (Turf) 1,200m
5.45pm Burj Nahaar Group 3 $350,000 (D) 1,600m
6.20pm Jebel Hatta Group 1 $400,000 (T) 1,800m
6.55pm Al Maktoum Challenge Round-3 Group 1 $600,000 (D) 2,000m
7.30pm Dubai City Of Gold Group 2 $350,000 (T) 2,410m
The National selections:
4pm Zabardast
4.35pm Ibn Malik
5.10pm Space Blues
5.45pm Kimbear
6.20pm Barney Roy
6.55pm Matterhorn
7.30pm Defoe
The specs: 2018 Nissan Altima
Price, base / as tested: Dh78,000 / Dh97,650
Engine: 2.5-litre in-line four-cylinder
Power: 182hp @ 6,000rpm
Torque: 244Nm @ 4,000rpm
Transmission: Continuously variable tranmission
Fuel consumption, combined: 7.6L / 100km