SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 396.28-0.7%Dec 31 4:00 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: KyrosL11/11/2009 10:17:25 AM
2 Recommendations   of 218871
 
One more bear case on China, this time from Pivot Capital. Here is a summary of their conclusions. I have highlighted some points that are surprising to me and completely contradict what TJ is saying:

"In this report we describe the background to and the extent of the capital spending bubble in China and identify factors
that will precipitate its deflation. We focus on Chinese capital spending firstly because it is the single most important driver of current Chinese and global growth expectations and, secondly and more importantly, investment-driven growth cycles tend to overshoot and end in a destructive way.

We conclude that the capital spending boom in China will not be sustained at current rates and that the chances of a
hard landing are increasing. Given China’s importance to the thesis that emerging markets will lead the world
economy out of its slump, we believe the coming slowdown in China has the potential to be a similar watershed event
for world markets as the reversal of the US subprime and housing boom. The ramifications will be far-reaching across
most asset classes, and will present major opportunities to exploit. There are three key reasons why we take this view:

China’s expansion cycle surpassing historical precedents: It is widely believed that China is still in an early
development phase and therefore in a position to expand capital spending for years to come. However, both in its
duration and intensity, China’s capital spending boom is now outstripping previous great transformation periods.

Policy actions not sustainable into 2010. This year’s burst in economic activity has been inflated by a front-loaded
stimulus package and a surge in credit growth. Given their exceptional and forced nature we believe growth rates in
government-driven lending and capital spending will collapse in 2010.

Overcapacity and falling marginal returns on investment: Analysis of industrial capacity, urbanisation and
infrastructure development shows that China’s industrialisation and structural modernisation are largely complete. Combine this with falling returns on investment, and it becomes obvious that China’s long-term investment needs are grossly overestimated."

The entire article with charts here:

pivotcapital.com
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News