What i see, What i do, What i feel.

Review on “Economy in my mind” and Looking forward

Okay just some looking backs. AUD do dropped as what I thought, but it recovered back start of this year, but I’m still looking for it to go lower due to strengthen of USD in the future.  China economy still gloomy and it will go on as per usual. There are some actions taken by china government lately. 1st would be the restrictions on buying the property were removed for many cities. However, it does not really affect the economy as a whole (this is based on the perception: Government always act last, also because due to those restrictions, medias has bombard the TV with economy warnings etc. The market is now more cautious and conscious about this property thing), if you compare some property in 2nd tire city in china. It is far more expensive than those cities in developed country such as Tokyo, London etc. This bubble is going to burst, but just a matter of time (if I were to give it a time, I think it would be 2015, yes, next year). When it burst, the “water droplets” will hit the surrounding countries. In addition, reform in china is not gonna slow down as what I saw. Therefore, the economy is not going anyway but flat or down. However, for the long term wise (im talking about 5-10year horizon), china is still a good place to pump your money in (just my opinion, medical related business is still a good place to go).

Japan, yes. I still think the same thing. Going out of deflation? Yes. Going out of Debt? Well, not so soon or never in the next couple years (227% Debt to GDP, it is not going out of debt in next 5 years I think). Further depreciation in currency is really good for the country, but it seems that Japan is also under quite a lot of political pressures on depreciating further. I was looking for 107 to 1 USD but it isn’t go as what I thought. As for the REITs that I mention last time, most go as what I though it just don’t bring you much profits.

Recovery on the Western countries has slowed down unexpectedly. I thought it will continue for the whole year and get out of gloomy economy by end of this year, but I under estimated the Debt pressured face by Europe countries. Also, the recent Ukraine war was totally unexpected. One more thing that I unexpected was, Europe followed US to launch it is economy sanctions against Russia. I think it is silly, it is not thoughtful and it brings nothing good to Europe but plead US only. Just my opinion, Europe is just going to suffer more than expected and may become a time bomb in the World Economy again. (Not if it solve the problem with Russia, or maybe let’s have a WWIII and clear all debts by winning the war)

Lastly, looking forward. China economy is just going to gloomy as usual. (“So, how about the recent data? They are so good!” If you ask so. Well for that, I would say they are just data, official data I meant. The government use to have integrity issue on that if you do remember, so do the companies providing it). However, the Industry Leaders are just going to do great. Recently, from what I heard and what I saw. Banks start collecting back the loans and reluctant to give it out again despite the Company has a credit with the bank. This is bad sign, a very dangerous start. Basing on what I observed, shadow bankings are much more caution now and once they collect back the debt, the chance of letting it go again is very slim. Many companies has gone bankrupt due to cash crunch by the bank. Strikes become so often nowadays because many company can’t even pay their employees salary on time. Also, the problem is partially covered by the government because in china there is no such thing call filing bankruptcy. Yes, government will never let you file bankruptcy (if you have a big debt), they will try ways to cover/solve it.

US/Europe, so long as interest is not going up, US is doing OKAY. As for Europe, I’m not confident on it. I’m really pessimistic on Europe economy now.

Another good place to look into? I would suggest you South East Asia. Yes, Indonesia, Malaysia, Vietnam. These 3 countries are really potential. The new president Jokowi in my opinion will be a great help to jump start the economy in the next few years. If you are interested to park you cash there Indonesia would be a good place for SEA

Malaysia, well industry cost is now less than china, I believe in the next few years its cost will remain no much different with little advance unlike china. Therefore, with competitive costing (manpower) more factories would migrate sooner or later.

Vietnam, although strikes broke out recently, it is all back in order. Human cost is so much cheaper than china and supplier chain is getting better.

So where is china’s competitive advantage in the future? With 600million farmer who still supplying themselves on daily needs and 300million farmers working in the city? BUT, 600USD minimum wages per month and 1k+ USD per head count per year on medicare/insurance etc. which brings the month cost per head to around 700+USD/mth. Manufacturing industries is doomed soon, very soon in my opinion.

Well, again just my 2 cents.

bank stockschina cash crunchglobal economyhow to investinvestmentjapan recoveryopinionsportfolio management

Alex .D. • August 14, 2014

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