8/30/21-9/5/21 Weekly Reports: The Truth Of Economy In China

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1.High Fluctuation of Dried Shiitake Mushroom Price Index in the First Half of the Year

In the second half of 2020, the price index of Qingyuan Shiitake Mushroom was mainly consolidating and fluctuating; in December, the price index of Qingyuan Shiitake Mushroom closed at 114.81 points, down slightly by 0.63% compared to June 2020. in the first half of 2021, the price index of Qingyuan Shiitake Mushroom started to step down in the second quarter after fluctuating at a high level in the first quarter. In June, the price index of Qingyuan Shiitake Mushroom closed at 116.60 points, up by 1.56% compared to the end of last year. Up 1.56% compared to the end of last year. On the other hand, in the first quarter, the dried shiitake mushroom price index showed an upward fluctuation, closing at 126.99 points in March, up 10.61% compared to the end of 2020. in January, the dried shiitake mushroom price rose sharply by 9.80% to close at 126.06 points, driven by the trading peak at the beginning of the year. In the following two months, the dried shiitake mushroom fluctuated in a narrow range above 120.00 points, running at a high level. Entering the second quarter, along with the weather gradually warming up, the Qingyuan shiitake mushroom market also entered the off-season. After the fresh shiitake mushroom retired from the market, the dried shiitake mushroom trade was mainly in stock. Meanwhile, there were more substitutes such as fresh seasonal vegetables in the market, and several factors combined to cause the price to start showing a step-down trend.

In the first half of this year, the price index of dried thin mushrooms closed at 118.84 points, up 12.02% compared to December 2020. In the first half of the year, the price trend of dried thin mushrooms oscillated with wide fluctuations and concentrated on the first and second highest historical highs in the history of the dried thin mushroom price index.

In the first quarter, the dried thin mushroom price index continued to climb, up as much as 18.81% and 16.24% in January and March, respectively, with two big rises like one huge wave after another, pushing the dried thin mushroom price to a record high of 147.46 p.p. At the year-end in January, entering the Spring Festival trading peak, dried thin mushroom prices went upward in line. The price index jumped 16.25%. On the one hand, the demand at the retail end of the mushroom market was not released due to the escalation of epidemic prevention and control during the Spring Festival, plus in March, Qingyuan shiitake mushroom took hands with boxma fresh, and with the demand boosted by the e-commerce platform, the dry, thin mushroom trading volume was able to explore; on the other hand, the demand at the retail end was smaller due to the more gift attributes of flower mushroom compared to thin mushroom; on the contrary, due to the rising temperature in March, the fresh mushroom produced became thinner, and the quality of fresh dry thick mushroom decreased, while On the contrary, the quality of fresh, dried thick mushrooms decreases due to the rising temperature in March, while the price of high quality dried thick mushroom stock increases to squeeze the demand at the retail end. Therefore, dried thin mushrooms became the best choice for buyers, driven by various reasons.

In the second quarter, the price amplitude of dry mushroom remained high, with the price index hovering above 10.00% in each month of the second quarter, with the price index rising 15.61% again in May when foreign merchants came to Qing to buy a large number of dry mushrooms.

2.The First Half of 2021 Jade Carving Raw Stone, Finished Product Price Index to Continue the Upward Trend

In the second half of 2020, jade carving raw stone and finished product prices rose, with the index closing at 172.19 points and 154.47 points in December, up 30.17% and 18.48%, respectively the second half of the year. Among them, in the current domestic jade carving market, the raw stone is mostly dependent on imports in the context of foreign epidemic prevention and control, jade carving raw stone imports are restricted, the supply of raw stone is narrowed, resulting in the rapid rise in the price of raw stone.

In the first half of 2021, the Zhenping jade carving raw stone price index started from 172.33 points in January; as of June, the index closed at 179.14 points, the first half of the index maintained an upward trend, up 6.81 percentage points in the first half of the year, or 3.95%. Specifically, compared with the January-April price index up slowly, in May and June, the price index of raw stone rose faster, up 1.75%, 1.81%, the reason for this, mainly during the jade raw materials fair held successfully, driving the market set off the “raw stone procurement fever,” the formation of ” The world’s jade material gathered in the jade township, eight jade merchants convergence jade city” situation, resulting in the price index of the raw stone showed a rapid rise in the trend.

In the first half of 2021, the price index of Hetian jade was relatively high, with a significant increase from 185.99 points in January to 189.93 points in June, up 2.12%, resulting in a 2.16% increase in the price index of finished products in the first half of 2021. therefore, the finished product price index rose 2.16 percentage points, which is the main reason for the finished jade carving price index’s impact in the first half of the year. In contrast, Dushan jade, jadeite, agate finished product price index on the finished product price index less impact, June corresponding to the finished product price index closed at 126.82 points, 113.43 points, 116.15 points, the cumulative drive jade carving finished product price index up by 0.73 percentage points.

3.Temporary Intraday Suspension of Evergrande Bonds

On September 3, the trading of Evergrande bonds was temporarily suspended during the day due to a drop of more than 20%. On September 3, the Shanghai Stock Exchange announced that the trading of “15 Evergrande 03” showed abnormal fluctuation on the morning of September 3. Therefore, according to the relevant regulations, the Exchange decided to suspend trading from 9:33 a.m. on September 3 and resume trading from 10:03 a.m. on September 3. On the plate, Evergrande Real Estate Bonds showed a big drop, “15 Evergrande 03” fell over 22%, “19 Evergrande 02” fell over 16%, “20 Evergrande 01 ” fell by more than 13%.

And the announcement of the Shenzhen Stock Exchange (SZSE) also indicated that the company’s bonds were once unable to be traded in the early trading due to the drop of more than 20% of the single-day limit. After the resumption of trading, Evergrande bonds remained weak, with “15 Evergrande 03” finally closing at RMB 54.9, down 5.88%, and “20 Evergrande 01” closing at RMB 65, down 6.3%. Evergrande is the most heavily indebted real estate developer in China and one of the largest borrowers of China in the international market. Some analysts believe that Evergrande Group’s liquidity crisis and tight capital chain have caused its Evergrande shares and bonds to fall. The Financial Times reported on the 3rd that the fall in Evergrande bonds indicates that the recent sharp sell-off in Evergrande stocks and bonds has escalated again. “People saw the company acknowledge the risk of debt default, and then the market panicked,” the report said, citing analysis by BNP Paribas analyst Agnes Wong. As a result, she believes Evergrande needs to move quickly to dispose of its assets.

4.Communist China’s Manufacturing Activity Slowed Significantly in August

The Caixin China Manufacturing Purchasing Managers’ Index (PMI) for August 2021, released on September 1, fell 1.1 percentage points to 49.2, falling into contraction territory for the first time since May 2020. Both supply and demand in the manufacturing sector declined in August due to the epidemic and flooding. As a result, the manufacturing production index and new orders index fell below the Rongkuk line, with manufacturing production contracting for the first time since March 2020. Interviewed companies generally said that the number of new crown cases rebounded, coupled with the tightening of epidemic prevention and control measures, which impacted manufacturing production, further suppressed demand, and exacerbated the difficulty of supplying inputs. The disaggregated data showed that the volume of new orders in the intermediate and investment goods categories fell, and new orders in the consumer goods category were roughly flat.

Foreign demand also fell back. Due to the continued deterioration of the foreign epidemic, overseas demand. At the same time, it dampened while transportation was hampered, and the new export orders index was below the 50.0 thresholds in August for the first time since February 2021. The double drop in supply and demand also led to the first decline in China’s manufacturing employment index in five months in August, indicating a slight but limited contraction in the job market. Some surveyed companies reflected that the adjustment in employment size was due to a decline in product demand, and vacancies were not filled after personnel left voluntarily. The number of backlogs of work continued to rise in August. Although still small, the backlogging rate showed signs of acceleration during the month. It was the highest in three months, which was related to companies’ production cuts and capacity constraints.

The manufacturing purchase price index and the ex-factory price index rose slightly in August as inflationary pressures resurfaced. Manufacturers reflected that mainly by the impact of rising raw material prices and transportation costs, raw material purchase price index accelerated for the first time since May; the factory price index also ended the previous three months of falling trend, rose again, showing that some enterprises to transfer the pressure of rising costs to raise sales prices. Still, by the epidemic and relatively weak demand constraints, the price increase is limited.

5.Aluminum Prices Hit 10-Year Highs

Aluminum prices hit a 10-year high as fuses in China, the world’s largest producer, faced a severe power outage crisis, sparking concerns about supplies of the energy-intensive metal. The Guangxi region of China is the center of aluminum and alumina production, and the government called for strict limits on energy consumption in a statement released after Monday’s telegram. The region is China’s third-largest producer of primary alumina, with output expected to be 925,500 tons in July, according to the Communist Party’s National Bureau of Statistics. Wood McKenzie analyst Uday Patel said challenges with the Communist Party’s announced meltdown and global demand have lowered prices. He said Chinese production would remain higher this year than last year, albeit at a slower pace, and is about 500,000-600,000 tons below expectations for early 2021.

Meanwhile, Concentration Mistel said September production at Guangxi’s eight aluminum smelters in the first half of the year should reach up to 80% of average monthly output. However, this translates into an annual operating capacity reduction of 475,000 tons, it said. The benchmark aluminum price rose 1.8 percent to $2,696 a ton in official trading, the highest level since May 2011, at $2,726.50. October aluminum trading higher on the Shanghai Futures Exchange rose 1.2 percent to $21,390 ($3,311) and has been near highs since August 2008. SPREADS: The LME spot aluminum contract is trading at a $15 per tonne premium for the three-month term contract, signaling tighter availability in the near term. Dominance levels: LME data suggest that increased tension is the main condition for 50-80% of available stocks. Other prices: LME copper rose 0.5% to $9,457.50 per tonne, zinc 0.2% to $3,007, lead 0.8% to $2,278, tin 1.6% to $34,127 and nickel 2.5% to $19,488.

6.Hubei New Beans Quality Difference Price Chaos Northeast Chen Beans Continue to Catch Up

Since the new soybean season in Hubei hit the market, intermittent rains have continued for more than 20 days, bringing varying degrees of deterioration to early-sown and early-maturing classes of soybeans to be harvested. The poor quality and high prices of Hubei beans have forced the market to turn to the Guanzhou and Northeast production areas to purchase stale beans. Only some of the large households in the Guanzhou production area still have a small number of surplus beans, prices after the early rise, are currently maintaining a stable operation; and the Northeast production area of high quality and high prices after the embodiment of some traders in the price, but also to enhance the enthusiasm to catch up. The reason is that last week Jubei futures bean a contract market “lightning” across 5900 points, coupled with August 24 national reserves of imported soybean auction put 294,800 tons, all higher than the reserve price transaction, so that the main body holding beans mistakenly believe that demand for a comprehensive upgrade. Because of the long rainfall, Hubei new beans only a small number of early sown or early varieties harvested at the end of July and early August can reach superior quality, farmers in the rainfall gap to seize part of the rape stubble early bean merchantability dropped sharply, part of the beam source can be used as a commodity price higher than the market affordability, the market is slow to transform so that some of the high moisture bean sources in the purchase network appeared “fever “phenomenon, it’s quality further decline.

Since mid-August, the northeast production area in nearly half a year after the weak market, bean source circulation increased significantly, prices also appeared in the last round of phase rebound; this phenomenon is the national reserve continued to buy, slowing down the pressure of the production area, different bean quality effective differentiation of the results, quality and price is reasonably reflected. As the downstream market in advance of the wait and see, the new beans in Hubei “disappointment” mood, before the northeast beans appeared briefly incremental replenishment, some traders in the production area not only price, and the phenomenon of the mutual chase.

Traders in the northeast production area chase up, is motivated by the State Reserve August 24 auction 294,800 tons of imported soybeans, its turnover rate of 100%, the average price of 4,444.4 yuan/ton, over the auction reserve price of 32.7 yuan/ton. Traders mistakenly believe that the market demand is great; in fact, the auction bean source inventory in Sichuan, Liaoning, Shandong, Hunan facilitates the local crushing enterprises “near to take,” the lack of driving effect on food soybeans. Imported bean auction results on even the futures brought about by the impact, beans a long day that there was a substantial increase in positions, last Thursday’s highest when beyond 5900 points, a small retraction on Friday, the futures market on the impact of the spot lack of substantial leading effect.

7. August Wheat Prices Moved up in Communist China

In August, the overall wheat price center of gravity moved up, the quality of new wheat scale of procurement difficulties, logistics costs rose to a certain extent to increase the cost of grain sources of cross-regional circulation, the production areas of new wheat purchase progress slowed down significantly, production and marketing areas reserve wheat round into the transaction price raised. According to statistics, July 26-August 25, the main production areas of the new wheat purchase volume of 9.464 million tons; compared to June 26-July 25, the main production areas of the new wheat purchase volume of 20.655 million tons. August 20 Shantou City Reserve Food and Materials Co., Ltd. commissioned the purchase of 19,106 tons of white wheat produced in 2021, all transactions, the reserve price of 2,900 yuan/ton (price type: bulk, warehouse pile good Delivery), the transaction price of 2870-2890 yuan/ton. Subject to Nantong City Tongzhou District riding bank grain reserves Co., Ltd., August 24 Southern wheat trading market bidding sales 4447.728 tons of 2021 Nantong production feed wheat, the reserve price of 2380 yuan/ton (price type: shipboard price), the highest transaction price of 2475 yuan/ton, the lowest transaction price of 2440 yuan/ton, the average transaction price of 2459 yuan/ton. According to market monitoring, as of late August, Jiangsu Xuzhou Jiawang area flour processing enterprises first-class white wheat into the plant price of 2600 yuan/ton, Anhui Fuyang Linquan area flour processing enterprises first-class white wheat net grain into the plant price of 2580 yuan/ton, Henan Xinxiang area flour processing enterprises first-class white wheat net grain to the plant price of 2590 yuan/ton, Hebei Shenzhou area large flour processing enterprises first-class wheat net grain into the plant price 2590 yuan/ton, Shandong Heze Shanxian area flour milling enterprises into the plant price of 2576 yuan/ton of common wheat.

8. Tightening of Mortgage Loans in First-Tier Cities, Making It More Difficult to Approve Individual Mortgage Loans

Since the beginning of the year, the property market in some hotspot cities has heated up. In this context, state-owned banks took the lead in raising mortgage rates. However, with the continuous increase of property market regulation and control policies worldwide, banks’ mortgage rates have shown an upward trend. It has become more difficult for individual mortgage loans to be approved. The Securities Daily reporter visited some Beijing bank branches as an ordinary salaried homebuyer. After investigation, we found that the difficulty of personal mortgage approval in Beijing has increased compared with before.

“Your situation is currently difficult to get a loan, both new and second-hand loans need to wait for approval, and it may be better if it is early next year.” A joint-stock bank business manager told the “Securities Daily” reporter. Subsequently, the reporter followed up to ask whether the loan quota is tight because of the difficulty of the loan; the manager said, “the current point in time is really awkward, even if you now through the application for approval, the release of funds may need to wait for the coming year.”

A city merchant bank outlet personal loan manager in Beijing said, “Whether you apply for a combination loan or a pure commercial loan, you need to wait for a longer lending time. So instead of saying that the quota is tight, we should say that our approval is more stringent, whether the release and the speed of the release are related to the buyer’s own loan qualifications.” Recently, the mortgage loans in some first-tier cities have generally started to tighten. For example, the reporter called the banks in Shanghai, Shenzhen, and Guangzhou, respectively, to consult personal loans to buy a house; the general feedback received is that the current mortgage approval is more stringent, the release time can not be determined.

9. CCP Established the Beijing Stock Exchange

Air China reported a net loss of 6.79 billion yuan for the first half of the year, compared with 9.44 billion yuan in the same period a year earlier, the company said in its semi-annual report Friday. Basic earnings per share were -0.49 yuan, compared with 0.69 yuan in the same period a year earlier. For the first half of the year, operating revenue was RMB 37.664 billion, an increase of 27.05% year-on-year. Among them, the main business income was 36.836 billion yuan, an increase of 28.99% year-on-year; other business income was 828 million yuan, a decrease of 23.93% year-on-year. The passenger input in the first half of the year was 82.500 billion available seat kilometers, an increase of 25.83% year-on-year; the total passenger turnover was 58.253 billion revenue passenger kilometers, an increase of 31.73% year-on-year; the passenger seat utilization rate was 70.61%, an increase of 3.16 percentage points year-on-year.

10. Ping an Repurchases and Increases Holdings One After Another

On the evening of September 3, Ping An of China announced that it had repurchased 532,100 A shares that day, with a high price of RMB 50.95 per share and a low price of RMB 50.72 per share, at the cost of RMB 27,055,800. This is the sixth consecutive trading day of buyback since Ping An announced its buyback plan on August 26, with a cumulative buyback amount of more than 2.7 billion yuan. However, more noteworthy is that the company’s soul man, Chairman Ma Mingzhe, personally came down to buy shares in the secondary market, spending about 2 million yuan, the first time since Ping An’s A-share listing in 2007. In addition to Ma Mingzhe, six other directors and supervisors of Ping An have also increased their holdings in the secondary market.

Since this year, Ping An’s share price has tumbled due to a series of factors such as poor performance of life insurance business, agent team adjustment, and large impairment charges on Huaxia’s investment. As of the close of business on August 26, Ping An of China’s A-share price was 50.30 yuan per share, with the total market value falling below a trillion to 928.9 billion yuan, and the company’s A-share price has fallen by more than 41% in total this year. Against this backdrop, Ping An announced a buyback program of up to $10 billion in the evening of Aug. 26 while releasing a lower-than-market-expected interim report in a bid to boost market confidence. In addition, ping An of China announced that, with the approval of its board of directors, it intends to use 5-10 billion yuan of its own funds to implement A-share share repurchases over the next 12 months, with a repurchase price of no more than 82.56 yuan per share. At the same time, Ping An of China said its directors and supervisors would also increase their holdings during this period.

By【G Translators – Financial Team】
Translator: Totoro

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