The first
casualties are the rig builders, the darlings of yesterday with order books to
the brim to last another 20 years of growth. Overnight the orders turned into
smokes and according to some analysts the oil rig companies are facing
bankruptcies! The reports are talking about Keppel Corp and SembCorp Marine,
two of our blue chip companies whose stock prices have fallen by 40 or 50%..
If the
reports are real, or close to the truth, then someone will be looking for
buyers of these companies just like NOL. The wheel of fortune is really
spinning hard and fast. Maybe they should look at China to be the Yellow
Knight. China has just saved Najib from his 1MDB investment flirtation. Don’t
sneer, China has very good reasons, economic reasons, to want to buy up the
half completed oil rigs for a song. At least the oil rig builders need not file
for Section 11.
Look, China
is developing the oil fields in the South China Sea and would need a lot of
cheap oil rigs. And since we are able to sell them cheaply, China may be
interested to pick them up with the companies thrown in. But just be careful
should China raise the issue of hosting American spy planes and ships to harass
them in the South China Sea. This would drag in politics from an otherwise
clean economic deal.
Would anyone be sending a team to China to
invite the Yellow Knight to save the day? The Singapore Discount or Singapore
Sale is on again for oil rigs or oil rig builders. Would these companies be
renamed Keppel Corp(China) and SembCorp Marine(China)?
56 comments:
China men and partically all Chinese Shylocks with inborn business acumen will not lose an opportunity gain if they see.one.
Their motto : Do not quarrel with.monies.
Politics or otherwise, they.put on a smile even to their most dreaded enemies.
So be sure they sapoo all.these assets.
The Chinese economy itself is decelerating rapidly .....
Just look at how rapid the belt weather commodity - copper - price has "collapsed" over the past year .....
The RMB 4 Trillion fiscal stimulus of 2009 that got the Chinese economy out of the 2008/ 09 GFC doldrum most likely cannot be repeated ......
What game changer can the Chinese undertake this round to ensure their continued ( sustainable ) economic growth and development .....
Try "catching falling knives" .....?
The AIIB and One Belt One Road initiatives are unlikely both BIG and FAST enough ...... in economic terms relative to the world's 2nd largest economy's output to make any ( significant ) difference?
not vested in oil related stocks.....
but, if did not remember wrongly.......
in 2014/2015 many so-called experts recommended investors
to load up oil related stocks.......
really listen-at-own-risk........
cheers.......
When the RMB 4 Trillion fiscal stimulus was rolled out in 2009 by the Hu/ Wen team, some economists considered it a "mistake" and simply just kicking the can further down the road yet with many other associated new teething problems compounding the Chinese economic structural issues and the worsening the previous problems they faced .....?
Reported,
Oil will head to
$20 per barrel.
Time to buy 7
and 4 wheel drive.
Will transport fare
be adjusted in tandem?
The Chinese economy, in terms of their debt levels ( at various levels and undertaken by various entities including municipal authorities ) and financial fire power, might be in worst shape than in 2009 ......?
7 Seaters.
Apology.
How to get the Chinese economy going again?
In terms of MP ( monetary policy ), so far PBOC ( People's Bank of China ) has fired several volleys ( with minimal impact ) .......?
It is not hard to foresee what are coming up ...... ?
What other measures China can or will undertake and their effectiveness ( or ineffectiveness ) .......?
And the timeline. .....?
After what happened in the US ( in recent years ), in Eurozone areas and in the future in the Chinese economy, many macroeconomics theories ( to deal with economic growth ) may need to be revamped..........?
// The first casualties are the rig builders,//
30 years ago, in 1986, there was a big ( titanic ) tussle between Saudi-led OPEC and US oil producers ....... ?
The Saudis won ....?
Round 1 ( 1986 )
Saudi ------- 1
US oil producers --- 0
Before old Man died, what did he said .....?
DUN panic ....?
Typo @ 11.21am
Should be " ..... what did he say ...? "
The ( equilibrium ) price of oil is a function of demand and supply?
The supply of oil is a function of many factors - US shale oil, OPEC production, world inventories, geo-politics, new ( deposits ) discoveries, new technologies ...... etc etc?
The demand of oil is a function of even more ( diverse, complicated, complex, unknown known and unknown unknown ) factors such as the trajectories of the US, EU, Chinese economies ( over the next few years and much further ..... ), alternative energy sources and technologies, global legislations, storage capacities etc etc ?
// The reports are talking about Keppel Corp and SembCorp Marine, two of our blue chip companies whose stock prices have fallen by 40 or 50%.. //
The elephant ( question to ask ) in the room could be why is the global stock market tanking the way they did given US unemployment is at its lowest since 2009 ( and therefore technically an indicator of its economic ( good ) health )?
In other words, given the US economy is doing "quite ok" based on several key indicators, what worries US investors to warrant persistent ( huge ) negative sentiments and ( unabated ) sell off?
That begs the question what could come next for the US economy. ....?
If the worry is just about China slowing from 6.9% in 2015, to say 6.5% - 6.8% in 2016, then how can the huge "fleeing" from the market be justified and explained?
In other words, the worries are MORE than just about China ( and oil prices, and interest rate hike, and geo-politics etc )?
It has to do with the side effects of QEs ( on medium and long term general price level and economic growth or the lack of it )?
The worries are on China AND the US economies?
The "healthy" US economy on the surface is actually "( very ) unhealthy" underneath?
Fiscal and monetary policies predominantly and inherently are short term in nature ( in terms of generating economic growth ?
No?
Look at China?
How long did the 2009 RMB 4 Trillion fiscal stimulus ( good ) effects last?
Now the "biggest elephant" in the room ......?
Look at the US?
How long did and would the ( good ) effects of the zero-interest rate and USD 4.3 Trillion QE1, QE2, QE3 monetary policies respectively last?
It is like a 70+-yo or 80+-yo lao ah pek?
If he is inherently unhealthy, Viagra or Cialis only works to a certain extent ......
Eventually, all the stimulus would be ineffective in bringing about the desired outcome of strong erection. ..... oops ...... strong economic growth?
Typo .....
Should be "stimuli"
The financial market knows the effects of the stimuli are ending ......
All the wealth of the past just ended up in the pockets of the super rich. No question about it.
Now, they are creating all this meltdowns, which they are responsible, wait for lesser peasants to accumulate a little wealth once again, join them in the circus and create opportunities for them to clean those peasants out.
The opportunities are always there for the rich, the cycles have been repeating - buy low, sell high and scorch the system. But for those at the bottom of the pit, just toil your lifetime away, for them to kill the fatten goose when the time comes again, maybe a decade or so down the road.
History is for repeating, never to be learnt.
// The wheel of fortune is really spinning hard and fast. //
The hardtruths are the US debts are astronomical and mounting, infrastructure are antiquated, the ( economic ) growth and employment increase unsustainable in the medium and long term?
With China playing the ( leading ) role that it did post GFC 2008/ 09 fast fading, where is the ( economic ) impetus going to come from and where to find ( extra ) money to plug the ( chronic and deadly ) budget deficit going forward?
Ultimately it may still lead to the FED ......
..... printing ( ever more ) to buy up the Treasury Bills sold every months .......
...... By the time the next ( US ) President takes over in Jan 2017, how large would the US debts ( grown to ) be ( from current USD18+ Trillion )?
The cans are just being kicked down the road ( temporarily ) for now .....
The last hope ( all along in recent years ) was China?
With PBOC having to "devalue to keep its economy afloat", it is written all over the walls?
For the US, with a lame-duck president in his last year ( of office ), the whole ( economic ) game is in the hands of the FED?
But FED chairwoman Janet Yellen is an ex-economics professor at an Ivy League uni and she knew too well about the nature and ( neutrality ) role of money ( supply ) in the scheme of economic growth?
So too vice-chair Fisher and the rest of the presidents and governors sitting in the FOMC .....?
// This would drag in politics from an otherwise clean economic deal.
Would anyone be sending a team to China to invite the Yellow Knight to save the day? //
So one possible solution to China and the US economic problems is probably contained delicately in the above quoted statements?
How?
China and US can TRY right hands "shake hands", left hands "catch onto each other balls" .....?
"MAB"?
"Mutually Assured Ball-lessness"?
Win-win?
Solve economic problems and avoid conflict at the same time?
One stone 2 birds?
Remember the Black Monday October 1987 US stock market crash?
Many similar factors are present but at many times more magnified?
Increased market volatility .....?
Elevated market volume in a declining market?
Come on lah!
Who can compete cheaper than them?
Their yards and their capability is no longer in the 80s. Now is 2016!
Even steel is from their own backyard. Singapore still need to import.
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