China LEI Increases: "Economic expansion should continue short-term"

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The Conference Board: China Monthly Leading Economic Index

China Monthly LEI & CEI

Current Leading Index: 257.5
Current Coincident Index: 234.9
Post-Recession LEI High: 257.5 (February 2013)
Post-Recession CEI High: 234.9 (February 2013)



Says Andrew Polk, resident economist at The Conference Board China Center in Beijing: “The Leading Economic Index for China maintained its pace in February, a sign that the current economic expansion should continue in the near-term. Current economic conditions strengthened considerably compared to previous months. However, the six-month average growth rate of the LEI has weakened. The drivers of growth remain fragile, and recent improvements in consumer expectations are not likely sustainable in the face of rising inflation. Investment activity, which is also underpinning the current growth rebound, is heavily credit dependent and could be affected by changes in monetary policy in the wake of the leadership transition.”

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China Manufacturing Slows: "Pace of recovery is mild"

China Manufacturing PMI by Month
Current Index: 50.4
Chart High: 54.5 (January 2011)
Chart Low: 47.6 (August 2012)
The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "The final February HSBC manufacturing PMI suggests a slower pace of expansion. But China's recovery continues on improving domestic demand conditions and the labour market. The pace of ongoing recovery is mild, implying no need for the PBoC to tighten policy any time soon."

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China Manufacturing Expansion Slows: "Gradual Recovery"

China Manufacturing PMI by Month
Current Index: 50.4 (Flash Estimate)
Chart High: 54.5 (January 2011)
Chart Low: 47.6 (August 2012)
The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "The Chinese economy is still on track for a gradual recovery. Despite the moderation of February’s flash PMI, the index recorded the fourth consecutive reading above the 50 critical line. The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth."

China Manufacturing PMI Moving Averages
3-Months: 51.4
6-Months: 50.4
12-Months: 49.4
The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



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China LEI Increases: "Economic rebound continues to look modest"

The Conference Board: China Monthly Leading Economic Index

China Monthly LEI

Current Leading Index: 253.4
Current Coincident Index: 233.7
Post-Recession LEI High: 253.4 (January 2013)
Post-Recession CEI High: 233.7 (January 2013)



Says Andrew Polk, resident economist at The Conference Board China Center in Beijing: “January’s acceleration in the LEI was driven primarily by consumer expectations and estimated real estate activity, both of which were likely positively affected by the Chinese New Year holiday. Credit extension also contributed to the increase in the LEI. Despite the seasonal uptick in some components, recent gains in the LEI have become less widespread and the current rebound in economic activity continues to look modest.”

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Jim Rogers: The Rise of China and the Asian Century

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Jim Rogers

Jim Rogers on China's Ascension, Wall Street's Downfall, and Obama's Failures

Jim Rogers, CEO of Rogers Holdings and author of "Street Smarts," tells Reuters Consumer News Editor Chrystia Freeland that China will ride out internal issues to lead the world. Rogers also says that Wall Street's ways will erode its stature and President Obama's ideas for reviving the economy will fail.

About Jim Rogers Jim Rogers, a native of Demopolis, Alabama, is an author, financial commentator, and successful international investor. He has been frequently featured in Time, The Washington Post, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times, and most publications dealing with the economy or finance.

Street Smarts: Adventures on the Road and in the Markets by Jim Rogers

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Chinese Economy and Employment Expands

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China Manufacturing PMI, Services NMI, and Composite PMI by Month
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Hongbin Qu, Chief Economist, China Co-Head of Asian Economic Research at HSBC, said: "Services activities resumed faster expansion on rising new business flows, along with the recovery of manufacturing growth. Still solid job gains plus higher business expectations bode well for further improvement of services sectors’ growth. Following the growth bottoming out in 4Q 2012, China’s growth recovery is now on a firmer footing."

Chinese Employment Expands "Staff numbers increased at a marked pace in the service sector during January, despite the rate of job creation having slowed from the previous month. Employment levels in the manufacturing sector also rose, albeit slightly. At the composite level, staffing levels increased modestly and at the fastest rate since May 2011."

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Baidu Earnings Slower

● Baidu Planet ●

Baidu reported QE December 2012 financial results on February 4

Baidu Earnings Disappoint: Revenues Up, Margins Down

Baidu (BIDU) reported record revenues of RMB6.335 ($1.017 billion) for the quarter ending December 2012, but GAAP ($1.28) and non-GAAP ($1.31) earnings per share did not keep pace. Though both were the second best ever, the gross profit margin (68.5%) fell to an 11-quarter low preventing a push higher for earnings per share to a record. Lower margins offset higher revenues and resulted in lower income. This negatively impacted earnings per share. Read more and see charts at Seeking Alpha.

● Baidu Planet ●

China Manufacturing Rises: "Gaining further steam"

The HSBC China Manufacturing Purchasing Managers' Index, compiled by Markit, increased +0.8 to 52.3 in January 2013, the highest since January 2011 (54.5).

China Manufacturing PMI by Month Manufacturing began expanding, an Index reading of greater than 50, in November 2012. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: “A higher reading of January final manufacturing PMI implies that China’s manufacturing activity is gaining further steam on the back of improving domestic conditions. We see increasing signals of a sustained growth recovery in the coming months: the steady investment growth led by infrastructure projects, the improving labour market conditions boosting consumer spending, and the ongoing re-stocking process to lift production growth.”

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are continue rising. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



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China Manufacturing Rises to 2-Year High!

The HSBC China Manufacturing Flash Purchasing Managers' Index, compiled by Markit, increased +0.4 to 51.9 in January 2013, the highest since January 2011 (54.5).

China Manufacturing PMI by Month Manufacturing began expanding, an Index reading of greater than 50, in November 2012. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said: “At 51.9, January’s HSBC China manufacturing PMI rose for the fifth consecutive month to the highest level in two years, heralding a good start to the New Year. Thanks to the continuous gains in new business, manufacturers accelerated production by additional hiring and more purchases. Despite the still tepid external demand, the domestic-driven restocking process is likely to add steam to China's ongoing recovery in the coming months.”

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are now rising. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

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China LEI Increases: "Momentum may already be abating"

The Conference Board: China Monthly Leading Economic Index

China Monthly LEI

The current December 2012 reading is a post-recession high.



“Growth in the LEI for China slowed in December. A decline in real estate activity, a drop in new export orders, and weak consumer confidence accounted for the slowing, while credit extension and improved conditions in the manufacturing supply chain offered only little support,” says Andrew Polk, resident economist at The Conference Board China Center in Beijing. “Growth in the CEI moderated as well, underscoring the notion that economic momentum may already be abating, and is unlikely to rebound much further in 2013. We expect China to grow at 7.5 percent this year, slightly down from the 7.8 percent increase in 2012.”

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China Services Sector Expands

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China Manufacturing PMI, Services NMI, and Composite PMI by Month
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Hongbin Qu, Chief Economist, China Co-Head of Asian Economic Research at HSBC, said: "Despite the moderation of December’s headline services PMI, the underlying strength of services sectors improved in terms of stronger new business flows and employment growth. This, plus the further pick-up of manufacturing growth, suggests that China is on track for achieving around 8% y-o-y GDP growth recovery in 4Q".

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China Manufacturing Expands to 19-Month High!

The HSBC China Manufacturing Purchasing Managers' Index, compiled by Markit, increased +1.0 to 51.5 in December, well above the 41-month low of 47.6 in August 2012. That was the lowest since March 2009.

This is the second consecutive month of expansion (greater than 50.0), after 12 consecutive months of contraction (less than 50.0) from November 2011 to October 2012. The China Manufacturing PMI has been just below 50 for 15 of the past 18 months.

China Manufacturing PMI by Month Manufacturing began contracting, an Index reading of less than 50, in July 2011. Manufacturing has now been expanding since October 2012. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.



Hongbin Qu, Chief Economist, China Co-Head of Asian Economic Research at HSBC, said: "December’s final manufacturing PMI picked up for the fourth consecutive month to a 19 month high, thanks to the faster new business flows and the end of destocking. Such a momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilise. This, plus Beijing’s reiteration of keeping pro-growth policy in place into the coming year, should support a modest growth recovery of around 8.6% y-o-y in 2013, despite the ongoing external headwinds."

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are now rising. The PMI is a percentage - not a total.



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China LEI Increases: "Economic rebound still appears fragile"

The Conference Board: China Monthly Leading Economic Index

China Monthly LEI

The current November 2012 reading is a post-recession high.



“Strength in China’s current economic activity has been maintained in November and all of the components in the Coincident Economic Index now posted gains,” says Andrew Polk, resident economist at The Conference Board China Center in Beijing. “However, growth in the leading index decelerated slightly as real estate activity, consumer confidence and new export orders all contributed less to LEI growth in November than in October. Credit creation in the banking system remains the only consistent positive contributor to the LEI since early 2011. As a result, the sustainability of a broad based economic rebound still appears fragile heading into 2013.”

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China Manufacturing Expands to 14-Month High

The HSBC China Manufacturing Flash Purchasing Managers' Index, compiled by Markit, increased +0.4 to 50.9 in December, well above the 41-month low of 47.6 in August 2012. That was the lowest since March 2009. This is the second expansion (greater than 50.0) since October 2011 (51.0). There had been 12 consecutive month below 50, which indicates sector contraction, from November 2011 to October 2012. The China Manufacturing PMI has been just below 50 for 15 of the past 17 months.

China Manufacturing PMI by Month Manufacturing began expanding, an Index reading of greater than 50, in November 2012. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.



HongbinAs December flash manufacturing PMI picked up further to a 14 month high, it confirmed that China's ongoing growth recovery is gaining momentum mainly driven by domestic demand conditions. However, the drop of new export orders and the downside surprise of November exports growth suggest the persisting external headwinds. This calls for Beijing to keep an accommodative policy stance to counter-balance the external weakness, provided inflation stays benign”

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are now rising. The PMI is a percentage - not a total.



The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

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China Manufacturing Rebounds in November

The HSBC China Manufacturing Purchasing Managers' Index, compiled by Markit, increased +1.0 to 50.5 in November, well above the 41-month low of 47.6 in August 2012. That was the lowest since March 2009. This is the first expansion (greater than 50.0) since October 2011 (51.0). There had been 12 consecutive month below 50, which indicates sector contraction, from November 2011 to October 2012. The China Manufacturing PMI has been just below 50 for 15 of the past 17 months.

China Manufacturing PMI by Month Manufacturing began contracting, an Index reading of less than 50, in July 2011. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.



Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, said: "The final November manufacturing PMI stood at a 13-month high of 50.5 on increasing new business and expanding production. This confirms that Chinese economy continues to recover gradually. We expect GDP growth to rebound modestly to around 8% in 4Q as the easing measures continue to filter through.”

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are now rising. The PMI is a percentage - not a total.



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China Manufacturing Rebounds to 13-Month High

The HSBC China Manufacturing Flash Purchasing Managers' Index, compiled by Markit, increased +0.9 to 50.4 in November, well above the 41-month low of 47.6 in August. That was the lowest since March 2009. This is the first expansion (greater than 50.0) since October 2011 (51.0). There had been 12 consecutive month below 50, which indicates sector contraction, from November 2011 to October 2012. The China Manufacturing PMI has been just below 50 for 15 of the past 17 months.

China Manufacturing PMI by Month Manufacturing began contracting, an Index reading of less than 50, in July 2011. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.



Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, said: "As November’s flash reading of HSBC manufacturing PMI bounced back to the expansionary territory for the first time in 13 months, this confirms that the economic recovery continues to gain momentum towards the year end. However, it is still the early stage of recovery and global economic growth remains fragile. This calls for a continuation of policy easing to strengthen the recovery.”

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are now rising. The PMI is a percentage - not a total.



The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

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China LEI Surges: "Moderate rebound underway"

The Conference Board: China Monthly Leading Economic Index

China Monthly LEI

The current October 2012 reading is a post-recession high.



“The LEI picked up momentum in October, suggesting a moderate rebound is underway that may carry into the first half of 2013,” says Andrew Polk, resident economist at The Conference Board China Center in Beijing. “Growth was driven primarily by renewed real estate activity and upbeat consumer expectations, two areas which have been highly volatile in recent months. As such, the strength and sustainability of the economy’s acceleration remains questionable. Meanwhile, the CEI showed its strongest and broadest growth in several months, aligning with a raft of recent data suggesting that the cyclical slowdown, which began in the second half of 2011, has likely passed its trough.”

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China Manufacturing Contracts for 12th Consecutive Month: "Conditions deteriorate at marginal pace"

The HSBC China Manufacturing Flash Purchasing Managers' Index, compiled by Markit, increased +1.6 to 49.5 in October, above the 41-month low of 47.6 in August. That was the lowest since March 2009. A contraction was expected and ongoing slowdowns are projected. This is the 12th consecutive month below 50, which indicates sector contraction. The China Manufacturing PMI has been just below 50 for 15 of the past 16 months.

China Manufacturing PMI by Month Manufacturing began contracting, an Index reading of less than 50, in July 2011. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.



Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, said: "October’s final PMI rose to an eight-month high, implying that China’s industrial activity continues to bottom out following a modest pickup last month. This is mainly driven by the increase of new orders, thanks to the filteringthrough of the earlier easing measures, while exports outlook remains challenging. We expect a continuation of policy easing to further boost domestic demand and counterbalance the external weakness, leading to a gradual growth recovery in the coming quarters".

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends continue downwards. The PMI is a percentage - not a total.



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Baidu Earnings Review: Performance Rises to Another Record!

Baidu reported QE September 2012 financial results on October 29

Baidu met the lower end of their Q3 revenue guidance (actual RMB6.251 vs. projected RMB6.245) and reported record quarterly total revenues, operating income, net income, cash flow per share, and earnings per share. Gross, operating, and net margins continue above historical averages. Financial position is strong and liquid.

Although record performances continue to be reported and projected, the YoY growth rates for total revenues and earnings per share are slowing. The 10-quarter averages have been an incredible +76% and +98%, respectively. For the current Q3 these were +50% and +60%, respectively, which most companies and investors dream about. These historical growth rates are apparently impossible to maintain, even for Baidu.

Baidu Outlook CEO Robin Li and CFO Jennifer Li are estimating a possible record Q4 revenues of RMB6.155 billion to RMB6.345 billion. This ranges from a QoQ possible decrease of -1.54% to a possible QoQ increase of +1.50%. This is an increase of 38% to 42% YoY but yet a continuing downtrend in long-term growth. That is how spectacular Baidu's growth has been, even though YoY revenue growth is slowing it is still vastly superior to mere mortal companies.







"We are pleased to report a solid performance for the third quarter driven by encouraging customer growth and improvements to our monetization platform," said Robin Li, chairman and chief executive officer of Baidu. "During the quarter, we worked to improve user experience by more closely integrating Baidu's suite of market-leading vertical products with Web search," continued Mr. Li. "Mobile and cloud represent our vision for the future of China's Internet, and Baidu will continue to proactively drive the development of this crucial ecosystem. We stand ready to meet the challenges and capture the opportunities the PC-to-mobile transition presents."

Jennifer Li, Baidu's chief financial officer, commented, "In the third quarter, we saw solid profitability as we continued our strategy of investing in key areas of future growth, particularly mobile and cloud. In the quarters ahead, we will look to accelerate the pace of investment to achieve long-term, sustainable growth."

$BIDU

China LEI Edges Up: "Near-term outlook continues to be uncertain"

The Conference Board: China Monthly Leading Economic Index

The September 2012 China Monthly Leading Economic Index rose a slight +0.3 and +0.29% to 241.2 (preliminary), another post-recession high. The China Monthly Coincident Economic Index increased for the 5th consecutive month. Overall, continuing economic growth is forecast, but volatility and uncertainty has increased.

China Monthly LEI The current September 2012 reading is a post-recession high.



Andrew Polk, resident economist at The Conference Board China Center in Beijing, said "The LEI’s very modest pickup in September, due in large part to a heavy drag from real estate, points to an economy that is unlikely to pick up rapidly in the near term. Credit extension and some tentative stabilization in the manufacturing sector buoyed the index – along with slightly improved export orders going into the West’s holiday season."

"The real estate sector’s strong performance in August does not appear to have extended into September, a traditionally strong month for real estate transactions. Sharp increases in government-sponsored infrastructure spending should continue in the coming months, helping to support industrial and manufacturing activity, even as real estate activity remains weak. These volatile movements illustrate that the near-term outlook continues to be uncertain."

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