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Under the Banyan Tree - Nvidia, Bitcoin and enough cement to turn Britain into a carpark
22 Plays1 year ago
Fred Neumann and Herald van der Linde sink their teeth into some quirky facts on Asian markets and economics, as they comb through Herald’s latest '13 surprising stats' report. Disclaimer: https://www.research.hsbc.com/R/101/2kTNx6l. Stay connected and access free to view reports and videos from HSBC Global Research follow us on LinkedIn https://www.linkedin.com/feed/hashtag/hsbcresearch/ or click here: https://www.gbm.hsbc.com/insights/global-research.
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Transcript
Introduction to HSBC Global Viewpoint
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Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
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Make sure you're subscribed to stay up to date with new episodes.
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Thanks for listening.
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And now onto today's show.
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This is a podcast from HSBC Global Research, available on Apple Podcasts and Spotify.
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However you're listening, analyst notifications, disclosures and disclaimers must be viewed on the link attached to your media player.
Meet the Hosts: Fred Newman & Harold van der Linde
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Hello from Hong Kong and welcome to Under the Banyan Tree, where we put Asian markets and economics in context.
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I'm Fred Newman, Chief Asia Economist.
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And I'm Harold van der Linde, Head of Asian Equity Strategy here at HMZ Global Research.
Exploring the '13 Quirky Stats' Report
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Here's a question for you listeners.
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What do NVIDIA's market cap, Korea's love of online shopping and all the cement in China have in common?
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Well, the answer is they're all part of my co-host's latest 13 quirky stats report, which I'm delighted to say is a focus of today's show.
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Plenty of weird and wonderful facts coming your way.
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It's time for you to join us under the banion tree.
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Weird and wonderful, just like my co-host.
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Yes, yes.
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So Harold, another great report from you here.
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The Flying Dutchman, of course, being back with his favorite 13 statistics.
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It's been a regular report now.
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By the way, why the Flying Dutchman?
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I know you're Dutch and I know you fly a lot.
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There are eight sorts of Flying Dutchman.
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Of course, I fly a lot and I'm Dutch.
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So that helps, right?
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But it's also a KLM in-flight magazine.
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Apparently a horse that run.
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It's, of course, a ship that went down in the 1800s or something like that in...
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South Africa, there's an opera.
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I've got the other one.
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But I've counted that there are eight or nine.
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And there's a DJ in Singapore that calls himself the Flying Dutchman as well.
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So there are all sorts of Flying Dutchmans and I'm one of them.
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So I find it encouraging that you name your flagship report after shipwreck.
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So with that said, great, great statistics you always
NVIDIA's Market Cap vs. Philippine Stock Market
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pull out.
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There's a lot going on.
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So one is obviously NVIDIA, the U.S. semiconductor company.
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It's been on a tear.
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Absolutely.
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Put that in perspective.
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What does that mean?
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Yeah, no, I mean, you can make these great comparisons in stock markets because one stock goes up, the other one goes down, and things come a little bit out of whack sometimes, right?
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But think about this.
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NVIDIA, on one single day, the 22nd of January 2024, had an increase in market cap.
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So the size of this company, the value of this company, went up $277 billion.
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Just imagine how much that is.
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That is the total size of the Philippine stock market.
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It's just incredible.
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So you can see the size difference.
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And this also tells you, and it's not completely fair, but how big the U.S. market is and how important developments in the U.S. market are to stock markets elsewhere.
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That's why we always talk about U.S. bond yields, because that drives that to a certain extent as well.
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So small wobbles there have a big impact right here.
Chinese and Hong Kong Stock Market Decline
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Now, if you put that in context with some of the Asian markets, for example, you write here that, you know, you talk about the sell-off, for example, in mainland Chinese stocks and Hong Kong stocks.
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Put that in context on the other side.
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So it's always easy to talk about the gains.
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Some stocks that have really done very well.
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This is a nice one.
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Mainland Chinese and Hong Kong stocks, they have not performed very well.
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So they've lost 4.8 trillion US dollars in market gap since 2021.
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So that's when after COVID China initially did very well, but then the market really started to come off.
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That is more than the market cap of all stocks in India.
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That is the size of India that has just disappeared from the Chinese market.
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And again, it tells you, because China is still there, how big China was from the very beginning, right?
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And how big it actually is still now, despite the massive decline in that stock market that we've seen over the last couple of years.
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So does that mean, so U.S. is clearly the biggest stock market and some of the single companies in the U.S. have enormously big.
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Talking about trillions of U.S. market cap, yeah.
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The mainland Chinese market has lost market cap.
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Is it still the second largest in the world or is the Japanese market now?
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So you've got multiple stock markets in China.
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So you've got Shanghai, you've got...
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The Chinese listed here in Hong Kong, you got Shenzhen.
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If you put all of them together, that is still the second largest stock market in the world in terms of size.
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And I believe still in trading as well.
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There's a lot of trading going on in particular actually in the Shenzhen market.
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There you go.
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All these headlines about, oh, you know,
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investors are shying away from Chinese stocks but still the second largest market
China's Cement Consumption and Construction Insights
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overall.
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I mean statistically maybe there have been times but I don't know exactly because Japan has done very well so maybe that has taken over but effectively it's the US has won, China is two and Japan is number three and they're vying maybe for a position there.
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Now, sticking with mainland China, there's another one here.
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Now, not market related, but you talk about cement consumption in China and how that compares.
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Yeah, so annual cement consumption in China is down 15% since 2020.
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So that's the start of COVID, give or take.
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That is still more than the US has consumed in cement in the last 20 years together.
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So again, the US is building infrastructure and needs cement.
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But what they've done over the last 20 years is basically what China has not consumed in the last couple of years.
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That is just, again, the amount of cement that's being consumed in China, which is, of course, still the emerging market economy that is building up its infrastructure, is just staggering.
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I mean...
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You're an economist.
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You must be looking at that as well.
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There's one statistic here that suggests, and it's hard to verify because there are probably a lot of assumptions that go in there, but there are experts who have calculated that China uses in three years more cement than you would need if you wanted to turn all of Great Britain into a car park.
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Now, I don't know whether it's a two or three-story car park, but it's certainly a lot of cement, yeah.
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There's a lot of cement that is still used because factories are being built and roads are being used.
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There is a slight subtlety, though, when we say China is using more cement than the U.S. in sort of 20 years or so.
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It's that building in China, mainland China, is much more cement intense than in the U.S. The U.S. uses much more steel for building large structures, whereas in China, they use much more cement.
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So it's not like for like, but still, it just speaks.
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And I guess this will change over time in China, right?
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Because China is now talking about building industries that are high-end tech and these sort of things, renewables, semiconductors.
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I guess they're not so cement intensive and more copper.
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That's right.
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The cement's intensive.
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And knowledge of course intensive.
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Yeah, that's right.
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Over time it will come down.
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So maybe in 15 years time we'll find that Bangladesh has got more cement consumption than all of China or something like that, right?
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So these things change over time.
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Yeah, that certainly, the building boom in China, the construction boom, is nearing a structural end, if you will, right?
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We've now rebuilt these cities.
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We've built the infrastructure.
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We moved the people, and now we move on to other things.
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Great series of statistics here, but I think before we delve deeper into some of the other ones, it's probably a great point to take a quick break.
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And when we come back, we'll look at Bitcoin.
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And that's suddenly back on your radar, Harold.
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So let's talk about that after the break.
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Good plan.
Bitcoin's Market Cap Phenomenon
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So Harold, we're all discussing here some of the key statistics that you dug out.
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Again, a great report.
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One of them relates to Bitcoin.
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And forgive me, but I thought, you know, we stopped talking about cryptocurrencies, but they've been roaring back again in the last several months here.
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So you talk about the market cap of Bitcoin.
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Yeah, so the market cap of Bitcoin, so there's the total value of Bitcoin outstanding.
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That's, of course, risen tremendously because the price of Bitcoin has gone up quite a lot.
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If you put all of that together, that is more than the GDP of 159 of the world's economies in 2023.
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Not combined.
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Individually.
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Individually.
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So it would be one of the largest economies.
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Otherwise it would be bigger than the whole world, right?
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Yes.
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Sorry.
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Yeah.
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So it is bigger than 159 countries.
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Each of these countries actually is smaller than the total value of Bitcoin.
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So imagine that.
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Some might argue there's more value being created in these economies than with Bitcoin.
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But we'll leave that to people who understand much more about cryptocurrencies than I do.
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So this struck me as interesting.
Korea's Online Shopping and E-commerce Dynamics
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online retail sales in Korea.
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So when Koreans go shopping, that's now increasingly done online, much more so than other places.
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Yeah, it's about 40%.
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So almost half of what they buy, four out of 10 things that they buy, is online.
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Now compare that in the US, it's about 25.
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So one out of four products that you buy comes out of an online website.
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And this is interesting because online retailing, e-commerce, has really taken off in Korea, but also in China, in Asia in general, more so than I think in Europe or the US.
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And what you now see is that the large, particularly large Chinese internet names, they're saying, well, we've learned our lessons on how to do that in, say, China.
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We're going to do this in the US.
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We're going to go to Europe.
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So they have active strategies to go in these markets and sometimes come with really
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cheap product or low price product that is highly competitive and are gaining market share in the US and Europe.
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Yeah, one of the reasons perhaps why the online retail sales penetration is so much higher in Asia is that you have much more compact cities.
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So logistically sometimes easier in Asia to build up very large distribution centers and deliver the goods.
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Now that the Chinese e-commerce retailers are going to the U.S., I think one challenge will be replicating the logistics network, right?
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That's where probably some of the incumbent U.S. players might still have an advantage because you need to really build out networks of warehouses to have same-day delivery.
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That is actually a monumental challenge.
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Yeah, it's these sort of challenges where we'll find out over time how these Chinese internet giants are going to deal with that.
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It's not only logistics, I think it's also consumer preferences.
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That's not just only delivery, but the sort of product that they want, price sensitivity.
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So they'll have to learn these lessons and that will determine if they're going to be successful or not.
Philippines' Nickel Production and Mining Opportunities
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Shifting consumer taste, that's important.
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I still like to go in the shop and grab, feel the things.
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Yeah, I was also born in the 70s, so I like to go into a shop and buy things.
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And it's the 1970s, we should say, not the 1870s for our audience.
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For people that don't know us, that's right.
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So we have then another one, a final one I wanted to bring up, which is the Philippines is a large nickel producer.
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Now, I thought it was interesting.
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It's because we talk about Indonesia being a key nickel producer.
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That's right.
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This is why we put this one over there.
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Yes.
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If we talk about nickel, it's very often in the past, it was Russia was very dominant.
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Indonesia is very dominant.
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That's where the EVs are going, where the battery makers are going.
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But actually, the Philippines is quite a sizable producer.
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It's got the six largest nickel reserves in the world, but it's the second largest producer of nickel ore.
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So it's punching above its weight in that particular sense.
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But it doesn't really come onto people's radar screens.
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Yeah.
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Yeah.
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And I think that there's an interesting debate now in the Philippines, and we had it actually for decades, and that is there are some constitutional restrictions to investing in mining in the Philippines.
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And that's why geographically Indonesia and the Philippines are comparable, but Indonesia has been much more of a mining industry.
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economy than the Philippines has.
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And so there's a proposal actually in the Philippines to do so-called cha-cha, which is charter change, which is a constitutional change to allow more foreign investment into the mining sector.
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And that would, of course, if that came through, that might kind of lift the Philippines a bit more.
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It would be very interesting.
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Indonesia has always been a mining country, right?
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So a lot of Australian and US mining companies have been there.
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So there's always been a
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particular sort of mining legal framework that has developed there over the decades.
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And maybe the Philippines is trying to reinvent that now.
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Of course, and although we have to be mindful of the environmental consequences, of course, as well with this.
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Great.
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This is, again, a wonderful, wonderful report.
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We didn't cover all the 13 key statistics that you put out.
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And you put that out, I think, periodically.
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Yeah, every quarter or so.
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If people want to see all 13 of them, they can go to the HSBC research website.
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Yeah, and just look at the report that's named after a shipwreck, which is the Flying Dutchman.
HSBC Global Investment Summit & Closing Remarks
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Well ladies and gentlemen, the Flying Dutchman may be at the bottom of the ocean but on the good ship Banyan Tree the wind is in our sails and we're setting a course for home.
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Before we go, a reminder for the very final time HSBC's Global Investment Summit kicks off on Monday the 8th of April.
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We're all getting excited here in Hong Kong, looking forward to welcoming our colleagues from around the world plus key figures from the global business, politics and investor community
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And I've been told that two quite prominent podcasters might be there as well.
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At least one prominent podcaster.
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The other one, perhaps.
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Email askresearch at hsbc.com for more information.
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Or if you're an HSBC client, reach out to your representative.
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And if we don't see you there, we'll catch you next week on The Banyan Tree.
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Thank you for joining us at HSBC Global Viewpoint.
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We hope you enjoyed the discussion.
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