Made in China “Mermaid” beat Kung Fu Panda 3
China movie industry is catching up with Hollywood
and Bollywood. Good old love story
between a Mermaid and a billionaire in today’s China. Mix together a message of environmental
protection, Jim Carrey style acting and Mr Bean sense of humor The results were USD 552.5 million box office
pretty much all in Chinese speaking markets.
The Mermaid, directed and produced by Stephen Chow who was born in 1962,
same year as Jim Carrey. Stephen Chow
also directed and produced Kung Fu Hustle (2004) and Shaolin Soccer (2001). It was released during Chinese New Year in
2016. Its box office beat Kung Fu Panda
3 and the Revenant. This column is not
about movie but the success of “The Mermaid” reflects the strength of China
domestic economy and its transformation to a service industry driven economy. China cannot compete against the Frontier
Markets such as Vietnam on cheap labor. Just
like Great Britain had to evolve from heavy industries such as coal mining and steel
plants. So when the media says China
economy is slowing down. It is a very
general statement. The labor and
resources intensive, environmentally damaging industries like the coal mine
owners in Guangxi are suffering. The
Alibaba headquarter in Hangzhou are full of young IT talents chasing their
dreams. China 6.7% GDP growth in Q1 2016
is the results of a cliff hanging resources sector and rocket growth in
services sector such as e-commerce, entertainment and tourism. China stock market has lagged behind Russia
and Brazil this year. There is still
time to get on the train. China A shares
indices such as CSI300 includes 300 listed companies and is a good
representation of the overall China A shares stock market. Hang Seng China Enterprises Index “HSCEI”
represents 40 large Chinese companies listed in Hong Kong Exchange is also a
good representation and Hong Kong is a more accessible market.
The “B” and the “R” in BRIC have been on fire in a
good way, stock market and currency wise.
Brazil Ibovespa index year to date return is +23.72% as of 21 April,
2016 and Brazilian Real strengthened against USD by 10.89%. Russian MICEX +10.71% and Russian Ruble
strengthened against USD by 8.8% this year. Well, the numbers look good and showed nice
recovery after last year correction. The
Brazil story is very different to Russia.
Investors are putting money on a potential change of leadership in
Brazil but change does not necessarily equals to economic growth. Typically, the country that host Olympics
empties their war chest to put on the games.
There is some ground to consider buy on dream and sell on fact in the
Brazil investment story.
Russia economy has been bleeding mainly due to oil
price collapse and it was looking very concerning in 2015 as the Russian
government tried to defend the Rubles.
In the end, Russian government accepted the currency market was like an ocean
and no one could fight against the force of natural. Beside a falling Rubles and stock market, the
government had to deal with the conversations with US and Euro over Ukraine and
sending troops to Syria. Against
expectations, some Russian companies survived the storm and emerged
stronger. Typically, these are export
driven business with cost in Rubles and revenue in USD or Euro. For example, steelmaker like Severstal saw
its profit margins rising to record level in six years. Its share price rallied from RUB 600 level at
the end of last year to RUB 800 in April.
Even the Russian banks are enjoying the sunshine. Sberbank has gone up more than 20% since its
dip in January.
The “I” and “C” in BRIC are behind. India Nifty index cover 50 blue chips and its year to date return is down
0.43%
and Indian Rupree has depreciated against USD by 0.36%. India attracted USD 63 billion worth of
Foreign Direct Investment (“FDI”) projects in 2015, overtaking China. This is the first time India top the FDI
chart. So the money has gone in through
direct investment although not through buying listed company shares. China CSI300 index that covers 300 stocks
listed in Shanghai and Shenzhen stock exchanges is down 15.29% year to date and
Chinese Yuan has strengthened against USD by 0.18%. This makes China the worst performing market
among the BRIC year to date.
Also want to say “Happy Birthday” to the Queen and
perhaps next year Donald Trump would represent US to congratulate her. Will Britain still be part of EU next year?
