Thursday, February 5, 2009


Deeplode had an interesting round of golf yesterday with some visitors from Hong Kong.

Interesting, not because of the golf swings, but because of the swing in mood amongst the visitors from my previous contact with them. They were actually talking about earlier than expected growth in China and a second quarter rebound.

In summary the points they made went like this

• The IMF on Monday suggested that although 8% growth for ’09 was a challenge it was possible.

• Steel prices have been rising since November, up another 200 yuan this week.

• Credit is flowing faster than expected. A major bank (Industrial and Commercial) has approved 252 billion yuan in loans in January for power grid , rail and road projects as well as to businesses and individuals.Deeplode is aware that these figures can be inflated by the lending process but they are still impressive amounts)

• They also pointed out that in their opinion China had nowhere near reached the limit of its stimulus capacity.

• There were large outflows of sovereign funds into off shore joint ventures. (We in Australia are aware of that!!!)

Deeplode has blogged previously in regard to China’s continuing investments in West Africa and in the prospects of FAR in Senegal

Asia has shown in the past that it can confound the experts by recovering quicker than expected driven by political need, opportunism and the sheer weight of population. The second quarter could be a repeat of that capacity to surprise.

No comments: