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With another trading week done, here are some articles to read over the weekend.

China property crisis: Why homeowners stopped paying their mortgages

A BBC News piece delves into a burgeoning ‘mortgage revolt’, where hundreds of disgruntled property buyers are threatening to suspend mortgage payments for unfinished homes.

S&P Global estimates the boycotted loans could total USS$145 billion.

China’s property sector makes up a third of its economic output. That includes houses, rental and brokering services; industries producing white goods that go into apartments; and construction materials.

The size of China’s economy means that disruption in a crucial market – like property – can affect the global financial system.

Experts believe contagion is the concern now – banks won’t lend if they believe the sector is tanking.

In defence of stablecoins

In a piece for the Financial Times, Miles Jennings, head of decentralisation at venture capital fund a16z crypto, argued the real issue around stablecoins isn’t computer code but collateralisation.

Endogenous collateral enables dangerous, explosive growth: when an issuer’s governance token appreciates, users can mint many more stablecoins. That sounds fine until one considers the flipside: When the price declines — as is practically guaranteed during a bank run — cascading collateral liquidations to meet redemptions trigger a death spiral. See TerraUSD as an example.

Regulation is necessary to prevent similar breakdowns, but overly restrictive rules are not. The truth is that enforcement actions under existing securities laws and anti-fraud statutes could have curtailed the proliferation of nearly every failed stablecoin to date.

Do corporate profits increase when inflation increases?

In a research piece released from the Federal Reserve Bank of New York, Mathias Andler and Anna Kovner looked at the question of whether companies raise prices to keep up with inflation and how that affects profits.

We look at this question through the lens of public companies, finding that in general, increased prices in an industry are often associated with increasing corporate profits. However the current relationship between inflation and profit growth is not unusual in the historical context.

 

The S&P/200 ASX is down 0.7% in late Friday trade as the week’s earlier exuberance wanes.

The biggest declines were sustained by Lake Resources and Avita Medical.

LKE shares are down 14% while AVH shares are down 16%.

 

Gold has been in a two-year bear market. Inflation remains high. Central banks keep raising rates.

All this raises questions.

Is gold still a viable asset class?

Can gold and gold stocks bounce back in coming months?

Should you have gold in your portfolio?

Can physical bullion protect your wealth? What role do precious metals like gold and silver play in the global economy?

Does gold have a place in a modern investor’s portfolio?

In an upcoming series, Brian Chu and four industry veterans will tackle these questions and more.

Is #gold still a viable #asset class?

Can gold and gold #stocks bounce back in the coming months?

What role do precious #metals like gold and #silver play in the global #economy?

In an upcoming series, industry veterans tackle these questions and more. https://t.co/vfqYxPE1wG pic.twitter.com/Ac4rV8vA6W

— Daily Reckoning Au (@DRAUS) August 12, 2022

When it comes to investment management firms, no one compares to BlackRock…

With a staggering US$10 trillion worth of assets under their management, this company has a big influence on markets. For that reason, whenever BlackRock decides to follow a new trend, the market pays attention.

After all, you don’t get this big without knowing your way around investment circles.

So with BlackRock now announcing a new private Bitcoin [BTC] trust for institutional investors, you know things are getting serious. Because with this new service, some of the firm’s biggest clients will now be able to gain direct exposure to the largest and most well-known cryptocurrency.

It’s a stark contrast to even a year ago when BlackRock’s CEO — Larry Fink — stated that:

‘We see very little demand for those [crypto] types of things.’

Although even this statement was an improvement over Fink’s 2017 views that bitcoin was exclusively used for money laundering.

What a difference a few years can make…

And for retail investors like yourself, whether you own crypto or not, the question now turns to what sort of difference BlackRock can make. Because more than anything else, this decision by the asset manager is a clear endorsement that they believe cryptocurrency is worth investing in.

Read full article here.

https://www.moneymorning.com.au/20220812/blackrock-the-worlds-largest-asset-manager-dives-into-bitcoin-should-you.html

Overnight, the Wall Street Journal cited data from Chinese real-estate developers showing China home prices are falling in many cities after a long stretch of uninterrupted growth.

According to China Real Estate Information Corp, sales of apartments across China fell annually for 13 consecutive months.

Exacerbating the matter is a brewing ‘mortgage revolt’, as disillusioned citizens threaten to withhold mortgage repayments for unfinished apartments.

Home buyers could refuse to pay back up to US$370 billion in home loans if their properties aren’t finished.

Read full article here.

 

Armed robbers assaulted the Guanaco-Amancaya mine complex in Chile owned by Austral Gold and stole gold precipitate material equivalent to 500 ounces of gold.

No one was seriously injured, said Austral.

Chilean authorities are investigating.

Austral will look into how it can strengthen its security.

Magnis Energy, a major shareholder in New York lithium-ion battery cell maker iM3NY, is up 30% at midday on Friday.

MNS announced that the lithium-ion battery plant has begun commercial production.

iM3NY expects first revenues in late September.

According to MNS:

Initial production of several thousand cells expected in the next month which will ramp up to 15,000 cells/day as production scales up to an annual production rate of 1.8GWh.

The S&P/200 ASX is down 0.5% nearing midday.

Lithium stock Lake Resources, which gained over 150% since mid-July, posted the highest decline as its recent rally came to a halt.

LKE shares are currently down 7%.

Fellow lithium stock Novonix is down 5%.

 

Magnis Energy (ASX:MNS) announced today that commercial production has started at the Imperium3 New York (iM3NY) lithium-ion battery manufacturing plant.

Magnis, with its joint venture partner Charge CCCV (C4V), are the major shareholders in iM3NY.

iM3NY expects first sales in late September with the preceding weeks used for quality assurance.

MNS expects initial production of several thousand cells next month, which will ramp up to ‘15,000 cells/day as production scales up to an annual production rate of 1.8GWh.‘

MNS said there is no cobalt or nickel in the iM3NY cells, which use technology patented by MNS’s partner, Charge CCCV.

The iM3NY team plans to increase annual capacity to 38GWh by 2030.