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Las Vegas Sands Corp. Message Board

  • bjspokanimal bjspokanimal Jun 24, 2013 2:01 PM Flag

    China: They Sure Know How To Scare People, Don't They

    For anybody "trading" LVS, it's too bad the lousy, 48.3 reading on HSBC's PMI report co-incided with the spike in China's interbank rate, Huh?

    Numura seems to agree that we're looking at a hiccup here, but the rest is all a silly panic attack, IMHO. Great buying opportunity... in their opinion and mine too.

    The PMI report has some follow-on... namely raw materials burgeioning inventories. Copper and aluminum are the main ones, but oil prices are sliding based in part on chinese demand.

    The deal with the PBOC's pegging of the inter-bank rate spiking to 12 then back to ~8 today when normal is closer to 4 is a political thing, and China is NOT going to risk the 7.4% GDP growth they've got now with a spiking rate.
    The reason for it is political... too many member banks are skirting transparency with PBOC with lending and money movement practices, so PBOC is picking and choosing the liquidity injections among the banks to send a message... and the upshot has been the overall spike. Once the lessons are driven home, we'll be back under a 5% interbank rate overall.

    All of this COULD unnerve VIPs a bit late this month, but not much beyond that to the extent that the interbank rate is driving things. Still, the HSBC PMI report DOES portend softer VIP gaming, and I would not expect VIP to rise above 10% YOY right away soon.

    Mass, however... no problem, IMO... and Sands is the mass leader with a likley good earnings report on deck.

    Who'da thought we could get $49 a share on the cusp of that... not me, but the... I'm not a trader so I'm OK with the high beta that LVS has the capacity for (albiet a beta that's calmed down a bit with shorter-term sampling time horizons, as somebody pointed out to me on one of my posts last week).

    Spok

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    • #$%$ China - who needs them

    • Update:

      China's overnight, interbank rate continued moving toward moderation today.
      The rate was 8.7% on Friday, and dropped to 6.65% today.
      The rate widely considered "normal", based on recent monetary policy, is in the 4.5% range.

      Separately, chinese subsidies to industry grew 23% last year over 2011, and appears to be continuing to grow thus far in 2013. To put that in perspective, consider that in the U.S., most subsidies for for "consumption", rather than "industrial production", as they do in China.

      Finally, 2 federal reserve presidents took the stage today in the U.S. to confirm that any monetary easing in the U.S. will be dependent on growth... and that the 'timeframes' indicated last week by Bernanke were only for reference.

      Therefore, I would submit that the only real "concrete" catalyst behind the large global selloff in stocks remains the China HSBC PMI manufacturing report last week, which came in at 48.3. For the uninformed (Tony/Mining_GED), a reading of 50 on the PMI is the threshhold that divides industrial expansion from industrial contraction).

      The impact that all this has had on gaming stocks is, in all honesty, the biggest head-scratcher of all.

      Spok

      • 6 Replies to bjspokanimal
      • Although it pains me to see the loss, I made some lemonade by buying a block much lower than I thought would be possible. Now happily rewarded...thanks smart money panic sellers!

      • Read this this morning: BEIJING — A People’s Bank of China official said on Tuesday that the central bank will guide interest rates to a “reasonable range”, suggesting a potential end to a cash crunch that has gripped the country’s financial system this month. Ling Tao, a deputy director of the Shanghai branch of the People’s Bank of China, also said at a news briefing in Shanghai that recent interest rate volatility in the nation’s money market is temporary. He didn’t elaborate on what constituted a reasonable range, though he said the central bank would be flexible in managing interbank liquidity. ”Some seasonal factors will gradually disappear,” Ling said. Interbank liquidity overall is abundant and risk is largely under control, he said. The central bank will continue to closely monitor liquidity changes and will make an effort to stabilize market expectations, he said.

        In early June, the central bank, moved to tighten liquidity in the interbank market, where banks lend to one another, in a bid to tame credit growth. That effort has since caused short-term interest rates to spike, to as high as 25% last week, creating a near panic in the nation’s financial markets as banks and other lenders scramble for funds. On Monday, the overnight rate at which banks borrow from one another eased by more than two percentage points to 6.64%, though it remains high compared with its typical range of 2% to 3%.

        IMO, this statement, "Interbank liquidity overall is abundant and risk is largely under control," is key. It means the PBOC sent a message to specific banks that the gov can reach out and touch them...

      • The talking head financial press here in the US, keep implying that China can't control their economy. They say things like, "the credit crunch will get out of control; there is no way China can engineer a soft landing; their housing bubble and ghost cities are going to cause an economic collapse; China can't sustain high rates of GDP growth; ... etc... ad nauseum.

        What does China do? They tell everybody that cares to listen just exactly what they are going to do and then they do it. China said they want to rebalance their economy and they are doing it. They say they want 7.5% GDP growth while they are transitioning their economy and they are doing it. They say they can engineer a soft landing and they are doing it. They say they want to slow speculating in housing and they are doing it. Still the press is all negative and they act like it a huge surprise.

        I'm beginning to see a pattern here... The financial press sensationalizes the news by spreading fear and doubt about things China telegraphed they were doing to tweak their economy. Then China does it. The financial press acts surprised, dismayed and it's something that portends a disastrous outcome. This incites negative market overreactions because the average US investor has no clue how the Chinese economy works. That causes ratings to go up as more people to watch their shows and read their #$%$ because these financial reporters must know how it all works... who cares what the facts are. The sky is falling... All while Macau continues to post record setting GGR numbers, above expectations.

      • Right on spok. Investors need to realize that this was a controlled attempt by the Bank of China to stop Shadow lending. They flexed their muscle plain and simple. China has 2 trillion in reserves that is able to inject for liquidity. There is a note out today as you mentioned that discuss the likelihood that VIP gaming Is not affected by this interbank loan interest rate. Investors need to realize gaming iis up 22% year on year and specifically for Las Vegas Sands this is the first full quarter of cotai central operations. China still has reserve requirements and interest rates that it can drop at any time to significantly ease liquidity.

      • Spok ,, don't try to analyze it to much ,,, it is what it is bro,, a loss for lvs that's all just a loss !! The entire gaming sector was down today !!

      • BJ

        HSBC's PMI is skewed toward export based industry. It doesn't capture much of the internal consumption activities. As China continue to deemphasis export, it will be less and less relevant to the true economic picture of China. I am still bullish on MPEL and LVS. However, I shift more of my money to MPEL from LVS now. LVS has had too many disappointing ERs recently. MPEL also had a deeper decline during this sell off.

 
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