Morning Brief – The Wild East

The Wild East

Investors with especially strong constitutions looking for yield should take a deep breath then investigate China’s corporate bond market. More than $200 billion of debt has been issued by 80 property developers to finance China’s real estate market which accounts for 30% of the economy. 3 year debt currently yields 18%pa which means that it is priced for market implosion. That debt has increased in yield dramatically recently in fact by 7% in the past month and currently is at levels above where it was at the height of the pandemic. Worrying for investors and developments (not a pun) being watched carefully by the Chinese authorities who cannot afford to let the market find its own levels. USD/CNY at 6.4788% after the PBOC’s intervention on bank reserve ratios as trailed here last week.

Republic of South Africa

Big test for the anti corruption fight in RSA as ex President Zumaie is jailed for 15 months for contempt. His supporters were not only marching but looting last night in Kwa Zulu Natal Province. Not good but ultimately the government must prevail if it is going to convince inward investors that they mean business. USD/ZAR 14.17 over the weekend but will doubtless be punished when markets re-open.

Big Boys’ Toys

Readers struggling to understand the differences between Richard Branson’s Virgin Galactica successful mission of yesterday and Jeff Bezos’ Blue Origin that will launch on July 20 need to understand the following: both are so called sub orbital ie less than 60 miles above Earth although Jeff Bezos may go as high as 62 miles. OK enough of the technicalities between the billionaires: Jeff Bezos’ goes higher, but Richard Branson’s is longer being 90 minutes versus 20 minutes for Blue Origin. Meanwhile back on Earth…

New Seekers

Delivering pop, folk, country and gospel music primarily in the early 1970’s to their army of fans, the New Seekers have gone on….and on with their tunes still riding the world’s airwaves as well as being a muzak staple in the world’s shopping malls. Still saccharine sweet after 50 years, here is one of their hardy annuals from a more innocent age their 1971 number, I’d like to Teach the World to Sing:

I’d like to build a world a home
And furnish it with love
Grow apple trees and honey bees
And snow white turtle doves

I’d like to teach the world to sing
In perfect harmony
I’d like to hold it in my arms
And keep it company

I’d like to see the world for once
All standing hand in hand
And hear them echo through the hills
For peace throughout the land

That’s a song I hear
Sing it along
Let the world sing today
Over and over

I’d like to teach the world to sing
In perfect harmony
La, la, la, la
To, do, do, do, do, do
La, la, la

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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