Click here for the PDF: The Weekly Beacon – October 13 2023

We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.

Feel free to send in your pictures of lighthouses to be featured in our weekly commentary.

This weeks issue: China property sector, Chinese debt, Chinese real estate, Leverage, Evergrande group, Bankruptcy issues, Israel attacked, Chinese economy, Chinese industrial growth, Chinese commodity demand, EV production, Fuel cell production, Mortgage rates, Quality versus liquidity, IPOs, Market resilience, Birkenstock IPO, Country garden property developer, Stagflation warning, Inflation rates.

Changing tides

China, once looked at as an up-and-coming, success story with a roaring economy has quietly gotten itself into trouble. The world’s second-largest economy has exponentially grown over the last 30 years. The country has improved its economy through a system that has both communist and market attributes. China’s economy has accelerated in size through the growth of the manufacturing sector, where China has become the world’s largest manufacturer of goods and largest exporter in the world. However, recently other sectors like real estate and technology have added to China’s economic growth, diversifying the country’s economy.

Here is China’s GDP since 1960, note the acceleration in the 1990s to now. The numbers are in trillions of U.S. dollars.

However, even though China’s economy has rapidly grown and gives emerging countries a blueprint for success, we think their growth rate is about to slow down. We think the Chinese economic growth rate will slow down substantially moving forward as their population declines and increases in age. China’s demographics reflect a problem that many are overlooking. The country has an extremely low birth rate and an aging population. We are not here to say we are long China by any means. The Chinese one-child policy will have a lasting impact that could negatively impact the country for decades. China’s economy also has major debt and real estate problems which has negatively impacted equity markets, and the Chinese Yuan over the last 1-2 years. We will not go on about this theme this week as we have talked about this in past issues of this publication but…. (To learn more about these issues simply Google the two terms 1. Chinese ghost cities, and 2. Evergrande Group debt crisis).


Click here for the PDF: The Weekly Beacon – October 13 2023