China Macroeconomics & Academia

Christopher Balding

Macroeconomics

We had predicted that official China PMI would increase and were forecasting 50.5.  We were not even close as PMI remain unchanged at 50.1 for May. Though the Chinese economy is built upon leverage, it seems clear that the real economy in China is stabilizing even if credit driven. What is interesting about our forecast is that even though official PMI remained unchanged, virtually all sectors reporting data throughout the month showed further increase in output from April. We are retooling our…

We had predicted that official China PMI would increase and were forecasting 50.5.  We were not even close as PMI remain unchanged at 50.1 for May. Though the Chinese economy is built upon leverage, it seems clear that the real economy in China is stabilizing even if credit driven. What is interesting about our forecast is that even though official PMI remained unchanged, virtually all sectors reporting data throughout the month showed further increase in output from April. We are retooling our…

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

Zoomlion Heavy Industry H / Equity Bottom-Up

We think the termination of the proposed acquisition of U.S.-based Terex will allow Zoomlion to redirect resources and efforts toward boosting its interest in the relatively resilient agricultural and environmental machinery segment.We had been sceptical regarding the acquisition, as the excessive valuation premium and added debt load to Zoomlion's already-weak balance sheet would not have been accretive to the firm's earnings or valuation, offsetting any potential benefits from synergies.Analyst: John Hu

We think the termination of the proposed acquisition of U.S.-based Terex will allow Zoomlion to redirect resources and efforts toward boosting its interest in the relatively resilient agricultural and environmental machinery segment.We had been sceptical regarding the acquisition, as the excessive valuation premium and added debt load to Zoomlion's already-weak balance sheet would not have been accretive to the firm's earnings or valuation, offsetting any potential benefits from synergies.Analyst: John Hu

Termination of Terex Acquisition Good for Zoomlion's Long-Term Prospects

With Chinese manufacturing showing signs of improvements post-Chinese New Year, it could be said that the country’s economy is regaining its strength.  China owes much of this stabilization to rapid growth in debt levels, investment, and declining outflows from tightened capital controls. Conversely, this implies it appears to be falling back on old drivers to keep growth high. Manufacturing is regaining some momentum due to increased exports and price increases in heavy industry like steel…

With Chinese manufacturing showing signs of improvements post-Chinese New Year, it could be said that the country’s economy is regaining its strength.  China owes much of this stabilization to rapid growth in debt levels, investment, and declining outflows from tightened capital controls. Conversely, this implies it appears to be falling back on old drivers to keep growth high. Manufacturing is regaining some momentum due to increased exports and price increases in heavy industry like steel…

Despite all the focus on Chinese financial markets and the accompanying imbalances, there are questions about how exactly to trade China right now.  Many have used the China blowing up thesis trying to replicate the Big Short.  This seems like a risky trade with a potentially very lengthy wait. There are other obvious trades in the interim that seem to have significantly positive risk adjusted return potential.  The trade today builds on one of the most widely recognized imbalances but creates…

Despite all the focus on Chinese financial markets and the accompanying imbalances, there are questions about how exactly to trade China right now.  Many have used the China blowing up thesis trying to replicate the Big Short.  This seems like a risky trade with a potentially very lengthy wait. There are other obvious trades in the interim that seem to have significantly positive risk adjusted return potential.  The trade today builds on one of the most widely recognized imbalances but creates…

Industrial output data implies a continued further increase in the Chinese PMI number due May 1.  Steel output has made small gains in April over March in advance of the upcoming building season. PTA output has increased significantly in April over March while glass has inched up incrementally.  Coal output and inventories have trended downwards given the increasingly mild weather in spring between winter and summer peak load times.  We are anticipating an uptick in the official PMI given the…

Industrial output data implies a continued further increase in the Chinese PMI number due May 1.  Steel output has made small gains in April over March in advance of the upcoming building season. PTA output has increased significantly in April over March while glass has inched up incrementally.  Coal output and inventories have trended downwards given the increasingly mild weather in spring between winter and summer peak load times.  We are anticipating an uptick in the official PMI given the…

China

Zoomlion Heavy Industry Science and Technology Co., Ltd.manufactures and markets construction machinery.  The Company's products include concrete machinery, cranes, road machinery, drilling equipment, and other heavy construction equipment.  Zoomlion also produces environmental machinery and satellite navigation products.

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Zoomlion Heavy Industry H (1157 HK)

Post-PMI Data Release Analysis

We had predicted that official China PMI would increase and were forecasting 50.5. We were not even close as PMI remain unchanged at 50.1 for May....

Christopher Balding

Termination of Terex Acquisition Good for Zoomlion's Long-Term Prospects

We think the termination of the proposed acquisition of U.S.-based Terex will allow Zoomlion to redirect resources and efforts toward boosting its...

Morningstar, Inc.

Early Look at May Chinese Data

With Chinese manufacturing showing signs of improvements post-Chinese New Year, it could be said that the country’s economy is regaining its...

Christopher Balding

Trading China: The Little Short

Despite all the focus on Chinese financial markets and the accompanying imbalances, there are questions about how exactly to trade China right...

Christopher Balding

Chinese Industrial Data on PMI Release

Industrial output data implies a continued further increase in the Chinese PMI number due May 1. Steel output has made small gains in April over...

Christopher Balding

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