Morning Mumble (Edited due to FT link disappearing): China FDI declines, now there's something unsurprising! Have AIM Companies finally learnt?!?! I doubt it but one can hope!

Good Morning, whilst was reading the FT this appeared: Foreign investment into China slumps By Jamil Anderlini in Beijing. Now I'm not one to criticise reporting, but this has been on the cards since the price drops in commodities, risks associated with the property sector, solar, you name it. In fact it's been declining since the Solar Bonds debacle. Now it's not just about the anti-corruption elements of China, it's about i) corruption ii) real time growth risks and iii) concerns over the stability and prospects. Ahh but now people are waking up and smelling the roses to my belief of China's growth, the declines are increasing. 

China is far from an ex-growth story but is an ex-exponential growth story and as such there's better places for those higher risk funds to place their monies than China. China has merely, via their anti-corruption stance, increased the risks of slowing growth and investing in China. One only has to look at the vacant unsold properties, that they can't even entice people to rent. Yes property is improving, but only leveraged. If the developer (as every paper has missed) cannot rent the property out what hope is there for the leveraged fast track approved purchaser that's allegedly getting a bargain? If someone would care to inform me. This could enable me to start a Chinese slum-lord business as well! 

Ironically if you look at the figures for FDI (Foreign Direct Investment), you'll note that it’s almost identical to a 4.5% growth rate for the company country. This may even be toppy in light of the property sector, coal mining sector (recent low quality bans), iron ore/steel mills and worse, retail starting to become very competitive. 

Following the AUD (Aussie dollar) against the basket, it’s my main FX trading currency (manually). The AUD has weakened more significantly against the US Dollar, obviously as facts (read not as concerns) come to light with China's economy. The probability of a stimulus in China was guaranteed with slowing developments and reducing tax receipts across their major industries. 

Now here's a surprise, China Boosts Stimulus With $81 Billion Credit Injection for Largest Banks. This is only the start of a broader stimulus that the Chinese Government has avoided to date, one could argue bringing forward projects, and injecting new capital is broader stimulus when the sums of the parts are added together. Please note the bulls, including Aviate are being contradict by the financial situation and events unfolding. 

We'll ignore the slump in China property taxation revenue the Government slips in the bottom of reports in small print. AUD will come under further pressure as support for iron ore drops further, with predictions coming in of around $75, which would suggest with 20% of Aussie exports being Iron Ore, there is an over reliance (read as massive weakness) that will create predictable volatility in the currency. As iron ore drops, the play is USDvs.AUD, GBPvs.AUD long, save for a Scotland issues which would be long USD, short GBP. 

So for those bulls out there, if Australia are factoring real risks into their forecasting and financial decisions, then surely the rest of the world should be. Minutes of the Monetary Policy Meeting of the Reserve Bank of Australia. 

So you have conflicting messages from the Chinese Government, Commerce Department: the use of foreign capital will enter the low-speed steady growth (FDI China). One stating its slow steady growth, the other a blip in the financial markets and is not permanent, despite the figures showing a consistent decline. It’s not for me to point the obvious out with China, but read, Statistics of FDI in China in January-May 2014, with the absence of FDI investors, comes a need by the Government to take this slack up. A well placed investment trust could take advantage here of quality investments, rather than the scatter gun, I think Invesco have one returning half decent returns, 16%... 

Worth considering for the more diverse investor are the prices for agricultural land in the UK as a hedge, having invested in this for some years, Land is now at 12-15K for smaller plots which suggests even post any fees that people pay this as a safer bet than savings accounts. 

Mariana Resources secures up to US$6 million investment to fund growth of South American exploration portfolio over the next 12 months. MARL have finally learnt what AIM companies should have learnt years ago about SEDA's (Standby Equity Agreements) and EFF (Equity Finance Facilities), please see the terms of financing. Now who'd have thought MARL had financing on the way? Knife catchers on the way... 

All commodities appeared to be supported by the Chinese "injection" measures, however finance isn't the only issue, demand and reduction in wastage are king here. The finance may assist the demand but only increase the wastage on a basic level. 

A hat tip goes to the over-exposed Nickel trade whom was short to get out quickly post the Chinese financial stimulus news, with a paltry 20c/lb dip and bounce he got off lightly! Steady as she goes $8.25lb... 

Atb Fraser 

To follow Chinese FDI: Ministry of Commerce People's Republic of China

Yet more positives for LGO: Leni Gas & Oil PLC Initial Flow Rate GY-665 one expects some decent coverage to come on LGO, with the potential towards 8 pence.