人民幣匯率—明修棧道？

美國以人民幣匯率作為攻擊點，表明上舊酒新瓶，實則上或許如畢老林先生所說的"魔鬼藏在細節中"。

除練總和畢老林先生所說的情況外，還可以這樣看：美國之患，還不在人民幣匯率高低的問題，而是在於人民幣有潛能成為國際結算貨幣。

當然，現在人民幣還有問題，尚未可以全面流通。但是以現今中國生產的貨物之多，種類之廣，已足以用來和一些只有原材料而其他一窮二白的國家完全以人民幣來交易。如果中國的公司能在物流、海外營銷和品牌創造多下點功夫，則擴大人民幣區至全世界是可以做得到的。

可是，這正好是對美國真正的威脅。縱使現在人民幣還差美元很遠，只要能為投資者和經商者提供多一個選擇，造成競爭，則已經足已動搖美國的國本。尤其是如果中國的貨品能通過中國的商號或品牌直銷海外，不用給外商控制市場並被逼單方面全面承擔匯率風險的話。再加上論軍事和外交的獨立性，中國又遠超於歐洲和日本；美國甚至不能用強去壓迫。

在這樣的背景下，再加上中國已經一步一步把人民幣對外擴張，美國肯定感到如芒在背。應付這個情況的第一道防線和摩擦點，正好是在人民幣匯價上。

一個貨幣要為廣泛接受，最重要的是其匯價穩定，其浮動有據，能讓使用人預期。要是有人為的不穩定因素影響其匯價偏離市場預期甚遠的話，則經營者在風險溢價和轉換成本之間自然偏向前者。當此之勢，在各主要國家均採取寬鬆貨幣政策的情況下，則依然是以美元的實力最強。因此，製造人民幣匯價有大幅變動的假象，或者至少是製造"敵動我動"的跡象，用以警告中國別打算在未得美國同意和參與下擴張人民幣以及中國的經商網絡，並拿日本作例子，將會是美國的明修棧道之計。

由奧巴馬打電話和胡總溝通，其事先開價之高，反應之速，能放能收的務實的處事作風，以及其兼聽各界又包容並收的能力來看，此美國政府將會是極難纏的對手。中國政府可要小心了。

小小分析

最近[股市]的回升，反彈而已；更須小心5號仔，提防大行補倉作另一輪沽售。畢竟逼宮行動尚在進行中，小心別中流彈是也。加上08的財報和09Q1的成績好不了，公司又因內亂無法有大刀闊斧的改革動作去重建信心和形象。小心，小心。

美債孳息上升，但小弟不認為美債就此崩潰：到底哪裡去找其替代品？更有趣的是10年期公司借貨和各房產按的息率亦同時上升，ARM和有關的公司的崩潰倒是越來越近。加上其他各國的債券也好不了那裡去，美匯軟不了；美債在回落後也死不了。不過，金價到底會不會升倒是值得看看：有大量未平倉合約在四月份，合約價由20號的85X直上到昨天收市的901.4。四月乃醜婦終須見家翁期和政變期，到底是金一枝獨秀還是金債雙翼齊飛？

各礦產方面，別輕信中美搞大白象就回升是也。過度擴張，過度擴張時的昂貴的資金成本，和大量的庫存，都令礦務公司的股價和原料價不能大漲。看看BDI仍如此慘淡可知一二。

HSBC? Not Yet; Hutchison Wampoo, the Next?

HSBC may have rebound in short term due to probable big accounts' closings on their open interest contracts. On the immediate past Wednesday, from 1000 to 1030, there were big lots of purchases on HSBC at 55.05. Similar purchases did not happen again in the remaining hours.

Nevertheless, it does not mean the end. Problems of HSBC, including cash outflow, loss of clients, ambigous amount of toxic asset, and internal struggle between American-backed shareholders and European-backed shareholders, have not all exposed and ended. The last factor has been the most price-affecting one.

On the other hand, Hutchison Wampoo has the following potential hazardous:

1. It has substantial amount of debts which interest expenses will be ranged from 6-9% of the capital.
2. The item "other financial investment" has been contributing around 1/4 of the total profits. No clear accounts on the details except tom.com, 3, and somoe other investments. Yet, all of them together only takes up not up to 10% of the total items. For the others, the statement only explains as "other cash and highly liquid asset".
3. The financial asset that contributes the above income also takes up a substantial part of total asset of HW.The only factor that can reduce its risk is that it is owned by Mr. Li Ka-Shing and run by Mr. Fok Kin-ling.

So, please pay attention to any news about them.

匯豐狂想曲

匯豐面對如此沽壓，或許是進軍美洲的副作用？

HSBC在北美首用零首期吸引顧客，又積極發展各類房貸產品市場搶客，早已令北美大行不滿。次按一役率先引爆，小人點看，匯豐此舉很有點"七傷拳"的味道，仗著底子厚去玩一鑊熟。點知你精我唔笨；兩大"拿拿林"轉做商業銀行，企穩陣腳後就來個"帝國反擊戰"，睇下邊個熟。至於會不會有"(白)武士復仇"，天行者的"第一名子"是"約翰牛"還是"瑞士糖"，還看下回分解。

同場還加映"基督山恩仇記"：艾力."騎士"會否再次借基督山伯爵之名去"逼宮"，而H記格連等人會是"將相和"還是"挑滑車"？六國大封相鑼鼓已響，靚次伯準備坐車，各位看宮可要擔定凳仔，不容錯過。如果乘機十八摸，上下其手，話唔定揩油high過索K tim!

The Choice of Stocks (1)

The financial tsunami creates a chance to search for best-buy stocks.

There are several types of stocks that may become best-buy:

1. The Basic Demand type - they are companies providing products or services required daily. No matter under what conditions, people still need to eat, drink, excrete, move, and sleep. In our life, we need basic food, water supplies, electricity, communication, transportation, and sewage treatment. We also need basic clothing and some other fundamental appliances. The companies that provide such basic needs will not have their business greatly declined. Their stocks, though, under extreme financial environment, may be under-valued.
2. The Government Policy type - they are companies being benefited by the national policy for economic stimulation. Usually government will invest on infra-structures (both hard and soft) for improvement on competiveness. Government may also support some industries for capturing new market and expanding existing market shares.
3. Survivor Type - they are the survivors of the affected industries. Due to the severe environment, many 0f their competitors are "phased out". Despite the contraction of the overall pie, the expansion of their shares may all too well offset it.
4. New Star Type - they are new ideas that create new demands and have the potential to be the next stars.

Each of them have their own criteria of choices. I will continue to discuss abotu them at the following days.

HSBC and US Bond Market

I have emphasized many times (in Hong Kong Economic Journal Forum) about HSBC already. From the current announcement, HSBC's latter half of 2008 and 2009 Q1 results can be expected.

The most serious part is the cash outflow through withdrawal by clients. The other serious part is the actual cash outflow to financial asset losses (means it must have owed the counter-parties debt - can be obligations to CDS and other tools).

Since the drops of US property market, now spreaded even to property management for commercial and retail purpose properties, have not ended and will only worsen, HSBC, actively involved in the US property market, will only get even worse.

NONE OF THE TIME NOW, NO MATTER AT WHAT PRICE, IS THE PURCHASE TIME.

A POTENTIAL FINAL TRIGGER ON ANOTHER BIG DROP MAY HAPPEN BEFORE THE KICK-OFF OF THE EXISTING PRESIDENT, CEO, AND SENIOR MANAGEMENT.

But after their step-down, light may shred to HSBC.

On the other hand, US bond market may not really burst as early as HKEJ other writers had predicted. The key reasons are:

1. China and Japan, combined together, only held about 1,158b USD US debt (totalled 10,890b USD), while US domestic market, government and public, have already hold 6,289b USD US debt (according to US treasuries data as per Jan 12, 2009). The sensitivity of China + Japan, by 1% drop, can only affect 0.1% percent of total USD debt, while US domestic can affect by 0.57% percent of the total. The signficant is not comparable.
2. What are the substitutes to US debt? Euro and GBP assets are in more troubles. JPY asset is not attractive; rise on JPY is due to unwinding. AUD and NZD have dropped by large percentage due to weakened raw materials demand. CAD relies on US too much. RMB is not a hard currency. Gold has both the role of alternate currency and commodity: while the former role makes gold attractive, the latter position offsets quite a degree of gold's value. Under the absence of the best substitute, US bond will still have demand.
3. Obama's office will certainly need to bail out some other firms. A method is to purchase the corporate bonds to inject money. Before the implementation of this strategy, as well as the turn around of US economy, Obama's government will not have sufficient gut to burst this bubble.
4. The bid/cover ratio shows that at reasonable discount rate/coupon rate, UST are still favored by the investors.

For sure UST will subject to a risk of deep adjustment on prices had Obama's government issued new treasuries at large discount and large amount. It is not wise to purchase the treasuries now (the timing has gone). However, calling it "collapse" is a sensational claim more than a refined analysis.

A Small Conclusion on Bond So Far

This is the first week of 2009 on which many bonds are sold. Results are as follows:

4-week: sold 24b, bid/cover 3.72, discount 0.06%;
(last sale: Dec 30, 2008: sold 22b, bid/cover 3.09, discount 0.03%)

3-month: sold 26b, bid/cover 3.11, discount 0.15%;
(last sale: Dec 29, 2008: sold 26b, bid/cover 2.44, discount 0.05%)

6-month: sold 27b, bid/cover 3.26, discount 0.32%;
(last sale: Dec 29, 2008: sold 26b, bid/cover 2.51, discount 0.25%)


3-year: sold 30b, bid/cover 2,21, yield 1.2%, coupon 1.125%;
(last sale: Dec 8, 2008: sold 28b, bid/cover 2.15, yield 1.245%, coupon 1.125%)

10-year: sold 16b, bid/cover 2.59, yield 2.419%, coupon 3.75%;
(last sale: Dec 8, 2008: sold 16b, bid/cover 2.44, yield 2.670%, coupon 3.75%)

10-year TIPS: sold 8b, bid/cover 2.48, yield 2.245%, coupon 2.125%;
(last sale: Oct 8, 2008: sold 6b, bid/cover 2.22, yield 2.85%, coupon 1.375%)

There are 2 common points in the auctions:

1. All yield rates of short-term bills increased from last auction.
2. All bid/cover ratio increased from last auction.

Despite the drop on bond prices owing to over-bought and worries on US government deficit, the demand on the bills, notes and bonds, are all solid at the current level. After the rather rapid drop before the 2009 auctions, the new auctions signalled that investors were still looking for a comparatively risk-adversed asset as a part of their portfolio. Assume the "announcements" by China and Japan governments about the decrease of bond positions are true, then the other non-governmental investors are still long for reasonably priced US government debts. Don't forget that the primary sales on last 2-3 months are not "normal" - Treasury and FED faced severe illiquidity period and took extreme measures to inject money to the banking and finance system. The first wave has passed so far, and it is normal that the price returns to a normal range and closes its gap with FED target rate 0-0.25%.

Special attention is to be made on the 10-year note and 10-year TIPS:

1. The trend of yield: both bonds' yields have decreased by 251pts and 605pts respectively from last sale.


2. The difference between their yields: in this current sales the difference between Note and TIPS is 0.174% that has increased by 0.354% from -0.18%.


3. The coupon rate of 10-year TIPS has increased from 1.375% to 2.125%.

Comparing with the last issues, this auction of the longer term bond still have their yields decreased which is a general trend. Market confidence in general is still weak and seeks for shelters should anything happens. But particularly for 10-year TIPS, despite the drop of yield rate, treasuries raised the coupon rate from 1.375% to 2.125% in order to attract bidding. It only happens when market considered that inflation is not the big concern and hence the yield of 10-year notes will be better than the 10-year TIPS, by equation that real interest rate = nominal - inflation. Thus, although in the primary market the yield rate of 10-year TIPS is still lower than that of 10-year notes, the trend may lean towards an expectation of prolonged deflation even up to 10-year. Assume this is the market expectation, then in 2009 and even 2010 USA stock market will only subject to rebound but not recovery.

Bond Market - Bursted or Yet?

January 5, 2009, Monday, 3-month and 6-month T-bills were auctioned. Results are as follows:

3-month T-bill:
discount rate: 0.15%; bid/cover: 3.11; total amount: 26b
(last auction: discount rate: 0.05%; bid/cover: 2.44; total amount 26b)

6-month T-bill:
discount rate: 0.32%; bid/cover: 3.26; total amount: 27b
(last auction: discount rate: 0.25%; bid/cover: 2.51; total amount 27b)

Both rates are increased from the last auction. The rise of the discount rate of 3-month T-bill is even at 3 times than before. However, it is too early to mention about the dead of bond market. The key is about the bid/cover ratio. For both T-bills, the bid/cover ratios are above 3.00. It is a signal of strong demand on the auctioned bills.

If we look for the discount rates of the same set of T-bills with the closest bid/cover ratio, they will be 0.15% (3 months, on November 17, 2008, bid/cover: 3.14) and 1.4% (6 months, on October 27, 2008, bid/cover: 3.28 ). Either they are the same as the current bid, like the 3-month bill, or they are 115 pts higher than the current bid, like the 6-month bill. Market has not completely walked away from the bond yet; rather they are looking for a "reasonable" bid. From the bid/cover ratio, currently the short-term T-bill ratio will settle around 0.05-0.15% (3-month) and 0.32-0.49% (6-month), according to the closest bid/cover ratio in December 2008 (3-month; 0.05%; on December 8, 2008 and 6-month; 0.43%; on December 8, 2008).

Taking a more macroscopic point of view, desipte the anticipation of the depreciation of USD ratio and potential inflation (which is quite impossible in short-term), T-bill so far is still one of the "safest" class of assets for central banks and even large commercial banks portfolio provided that USA government can still operate and honor its contracts. Europe can be a competitor yet it is subjected to a equivalent, if not bigger, scale of recession. EURO's strength is also subjected to further questions had EURO zone property market and domestic consumptions continued to drop. The lack of military strength of Europe will not help EURO stand stiff against USD either. Other Asian currencies, including RMB and JPY, have already heavily invested on Treasuries market. Their discontinuity on purchasing Treasuries will damage no-one but themselves. Their so-called threat of buying other asset in replace of US Treasuries can only be interpreted as "complaints". Once USA re-adjusted the basic discount rate for later rounds of auctions, in the short-run China and Japan will not deviate from US Treasuries in order to protect their own existing asset and currency base, particularly under a highly fluctuated market.

Jan 8 - Announcement about Consumer Credit

The next wave of concern will be the changes between debt-to-income ratio and consumer credits. While the debt-to-income ratio remains the same, the consumer credit contracts substantially these months. Combining with the risk premium of ARM: 540pts for 1 year and 559pts for 1 1/2 - 5 year despite the decrease of the FED target rate, the out-break of another credit crunch is coming closer. Integrating with the jobless claims announced on the same day, and the unemployment announced on Friday, the rebound may come close to an end, or at least will cease. In case the Gaza area caused another wave of shortage (pretended or true) of oil, then maybe even bond market will be affected. Even if big accounts will not take big actions on this week, data announced this week will be indicative.

RMB Spreads 200pts in HSBC

In recent 2 days when I deposited my RMB in HSBC, I discovered 2 things: first, HSBC would charge 0.125% service charge for a total amount of cash deposit at 12,000RMB/day or over (which the maximum had used to be 50,000RMB/day before the change). Second, when I checked the spread of RMB against HKD, it was 114.07:112.04 (friday) and 113.95:112.13 (yesterday), a spread of 203 and 182 pts respectively. Maybe I am over-sensitive, but both are not normal measures, anyone likes to express your valuable opinions?