Download Rohr China Deck 2015.10.07

Outlook for China & Commodities
Daniel Rohr, CFA
Director, Basic Materials
[email protected]
©2015 Morningstar, Inc. All rights reserved.
Key takeaways
3
Long-term outlook
We expect GDP growth of no better than 5% over the next 5 to 10 years.
12
Short-term outlook
GDP is already growing at roughly 5%.
16
Beijing’s big choices: Stimulus? Reforms?
Stimulus would make matters worse. Much-needed reforms will be painful and risky.
23
Equity market rescue
The cure is worse than the cold.
29
Currency devaluation
Beijing has the motives and means to prevent a sharp devaluation.
39
Global implications of a weaker China
How the infection spreads
42
Commodities outlook
China ended the last dark age for commodities. It might begin the next one.
2
Long-term outlook
We expect GDP growth of no better than
5% over the next 5 to 10 years.
3
Balanced growth of 80s and 90s gave way to investment-led growth in the 00s…
300%
GDP
Consumption
Investment
Cumulative real growth
250%
200%
150%
100%
50%
0%
1981-1990
Source: National Bureau of Statistics, CEIC, Morningstar
4
1991-2000
2001-2010
…resulting in growing imbalances.
Consumption
100%
90%
Investment
Government
Net exports
14%
2%
3%
15%
15%
38%
39%
6%
14%
3%
14%
80%
GDP composition
70%
35%
60%
43%
46%
50%
40%
30%
51%
46%
20%
43%
37%
38%
2006-2010
2014
10%
0%
1981-1990
1991-2000
Source: National Bureau of Statistics, CEIC, Morningstar
5
2001-2005
China’s investment share of GDP is nearly twice the average for its income level.
Other countries
55%
China
50%
Investment share of GDP
45%
40%
35%
30%
25%
20%
15%
10%
0
10,000
20,000
30,000
GDP per capita (PPP)
Source: World Bank, Morningstar
6
40,000
50,000
60,000
Excess capacity  Diminishing Returns  Bad Debt  Rebalancing
Household
Non-financial corporations
Financial
Government
300
250
Debt to GDP
200
150
100
50
0
1999
2000
2001
Source: McKinsey Global Institute
7
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 Russia India
Brazil
US
China’s investment boom outstrips all precedents.
China (98-14)
Japan (62-81)
Korea (84-03)
Taiwan (69-88)
50%
Investment share of GDP(%)
45%
40%
35%
30%
25%
20%
15%
1
2
3
4
5
6
7
Source: National Bureau of Statistics, CEIC, World Bank, Morningstar
8
8
9
10
11
Years
12
13
14
15
16
17
18
19
20
A “typical” post-boom decade would see China average 4.7% GDP growth…
"Typical" post boom
Boom
Our forecast
Boom
Post boom
Post boom
Boom
14.0%
12.0%
12.0%
12.0%
12.0%
10.0%
10.0%
10.0%
10.0%
8.0%
8.0%
8.0%
8.0%
Taiwan
14.0%
Korea
14.0%
Japan
China
Boom
14.0%
6.0%
6.0%
6.0%
4.0%
4.0%
4.0%
4.0%
2.0%
2.0%
2.0%
2.0%
0.0%
0.0%
0.0%
GDP
Consumption
Investment
GDP
Consumption
Source: National Bureau of Statistics, CEIC, World Bank, Morningstar
9
Investment
Post boom
6.0%
0.0%
GDP
Consumption
Investment
GDP
Consumption
Investment
…but bigger booms tend to end in bigger busts.
Taiwan
8.0%
GDP growth in reblaancing
7.0%
6.0%
China (our outlook)
Japan
5.0%
Malaysia
Korea
4.0%
Thailand
3.0%
2.0%
1.0%
0.0%
25%
China (implied)
27%
29%
31%
33%
35%
37%
Avg investment share of GDP in boom
Source: National Bureau of Statistics, CEIC, World Bank, Morningstar
10
39%
41%
43%
45%
Attaining 5% GDP growth in the years to come will require significant reforms.
Consumption
Investment
Government
Net exports
16%
 This is our outlook for average growth to 2022, not a
year-by-year forecast.
 Our outlook is predicated on significant reforms to
bolster consumption and improve investment quality.
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Note: Outlook assumes 1.5% investment growth, 7% household consumption growth, 7.5% government consumption growth, and 2% net export growth.
Source: National Bureau of Statistics, CEIC, Morningstar
11
2021
2022
Short-term outlook
GDP is already growing at roughly 5%.
12
We estimate 1H2015 GDP growth at 4.5%.
Consumption (household & govt)
Investment
Net exports
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Official
Note: We estimate 1% investment growth (official: 5.2%) and 7.3% consumption growth (official: 8.2%).
Source: National Bureau of Statistics, CEIC, Morningstar
13
Our estimate
Cement & steel volumes cast doubt on official investment growth rate.
Steel production
Cement production
Investment (GCF)
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
2000-2014 CAGR
Source: National Bureau of Statistics, CEIC, Morningstar
14
1H2015
Consumption has also slowed more than government figures suggest.
Official retail sales growth
1H2015
12.0%
Value-added tax
1H2015
10.0%
Production growth
1H2015
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
Retail sales
(nominal)
Retail sales
(real)
VAT
Source: National Bureau of Statistics, CEIC, Morningstar
15
Automobiles Refrigerators
Air
Conditioners
Washing
Machines
Instant
Noodles
Beer
Soft drinks
Cigarettes
Beijing’s big choices: Stimulus? Reforms?
Stimulus would make matters worse.
Much-needed reforms will be painful and risky.
16
Many argue China has “room” to stimulate, citing low inflation.
CPI
CPI ex. Food and Energy
110.0
108.0
106.0
104.0
102.0
100.0
98.0
96.0
94.0
92.0
90.0
Source: National Bureau of Statistics, CEIC, Morningstar
17
PPI
More cuts to reserve requirement ratio (RRR) and benchmark rates are likely…
RRR
RRR(large banks)
Benchmark lending rate (1 yr)
RRR(small banks)
24
7.0
22
6.0
20
5.0
18
4.0
16
3.0
14
2.0
12
1.0
10
0.0
Source: People's Bank of China, CEIC, Morningstar
18
Benchmark deposit rate (1 yr)
…but the PBoC can’t “push on a string”
Loan demand - manufacturing
80.0
Banking Climate Index
75.0
70.0
65.0
60.0
55.0
50.0
45.0
Source: People's Bank of China, CEIC, Morningstar
19
Loan demand - non-manufacturing
Falling prices reflect a surfeit of supply, not a shortage of demand
Steel production (kt)
Excess capacity (kt)
Capacity utilization
1,400,000
Thermal power capacity (MWh)
100%
Average utilization (hours)
1,000,000
95%
900,000
90%
800,000
7,000
6,000
1,200,000
1,000,000
85%
80%
800,000
75%
5,000
700,000
600,000
4,000
500,000
3,000
400,000
600,000
70%
300,000
2,000
65%
400,000
200,000
Source: China Electricity Council, China Iron and Steel Association, CEIC, Morningstar
20
2014
2015M8
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
50%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0
1999
0
0
1998
55%
1,000
100,000
1997
200,000
1996
60%
Stimulus is a shot of whiskey to cure a hangover.
Stimulus
Overinvestment
Excess supply
&
Diminishing
returns
Bad debt
accumulates
Prices fall
&
Economy slows
21
Reforms will be necessary, but painful.
Example: Credit
Status quo
► SOEs
and local governments receive preferential credit access.
Costs of the status quo
► SOEs
and local governments are largely responsible for China’s overinvestment and inefficient
capital allocation.
► As
long as they carry Beijing’s implicit backing, they will continue to receive preferential credit access.
► Excess
capacity and bad debt will continue to build.
Benefits of reform
► Allocating
credit according to market principles would eliminate the wealth transfer that hinders
household consumption and starves private enterprise of capital.
Risks of reform
► Removing
► Credit
22
implicit backing would require a major SOE or local government default.
would be re-priced on a massive scale.
Equity market rescue
The cure is worse than the cold.
23
Stock market rout didn't pose a major threat to consumer spending.
Real
Chinese household financial assets, December 2013
13.0
12.5
12.0
9%
11.5
Retail sales growth
Bank deposits
12%
Cash
Stocks
1%
Bonds
8%
Insurance
Other
7%
63%
11.0
10.5
10.0
9.5
9.0
8.5
8.0
Source: People's Bank of China, National Bureau of Statistics, CEIC, Morningstar
24
Nominal
Nominal retail sales decelerated
throughout bull market of June
2014 to June 2015.
Nor did it hamper corporate access to capital.
70,000
New TSF, YTD June 2015
60,000
50,000
40,000
30,000
20,000
10,000
0
RMB loans
Foreign currency loans
Source: People's Bank of China, CEIC, Morningstar
25
Entrusted loans
Trust loans
Undiscounted bankers
acceptances
Corporate bonds
Equity issuance
Panicked government intervention failed to prop up shares
June 12 Peak
5,166
Shanghai Stock Exchange Composite
6,000
July 8
Intervention
3,507
Sept 30
3,053
5,000
4,000
3,000
2,000
1,000
0
Source: Shanghai Stock Exchange, CEIC, Morningstar
26
China’s equity markets are cheap at a glance, but less so upon further
examination
Shanghai SEP/E
30.0x
Shanghai SEP/Eby sector, Aug 2015
100.0x
90.0x
25.0x
80.0x
70.0x
60.0x
20.0x
50.0x
40.0x
15.0x
30.0x
20.0x
10.0x
10.0x
0.0x
5.0x
0.0x
Source: Shanghai Stock Exchange, CEIC, Morningstar
27
Weighted avg
15.8x
Financials
7.9x
Consequences of Beijing’s failed intervention
1.
Intervention casts doubt on key reforms.
►
►
2.
Real reform of China's credit and currency markets, which are far larger and more important to
the real economy than the stock market, looks increasingly doubtful.
Failure to implement key reforms heightens the risk of a debt crisis and diminishes the
economy's long-term growth trajectory
►
3.
Questionable commitment to President Xi’s pledge to cede a "decisive role" to the market
Reforms will be critical if China is to address mounting structural problems and transition to a
more sustainable consumption-oriented growth model.
Failure to halt the rout risks denting party’s credibility as an economic steward.
►
Confidence in the party's ability to manage the economy is partly self-fulfilling.
►
So, too, would be a loss of confidence.
►
28
Faltering faith in the government's ability to "deliver" economic growth would have serious realworld implications, including tighter credit, reduced investment, and greater market volatility.
Currency devaluation
Beijing has the motives and means to
prevent a sharp devaluation.
29
30
Source: Bank for International Settlements, CEIC, Morningstar
07-2015
05-2015
03-2015
01-2015
11-2014
09-2014
07-2014
05-2014
03-2014
Japan
01-2014
11-2013
09-2013
India
07-2013
05-2013
03-2013
01-2013
Euro area
11-2012
09-2012
07-2012
05-2012
Brazil
03-2012
01-2012
11-2011
Australia
09-2011
07-2011
05-2011
03-2011
China
01-2011
11-2010
09-2010
07-2010
05-2010
03-2010
01-2010
REER, 2010=100
RMB had strengthened dramatically in real effective terms since 2010
140
United States
130
120
110
100
90
80
70
60
PPP-based analysis suggests RMB could be 30% overvalued.
All other countries
China
Expon. (All other countries)
1.2
1.1
PPP conversion factor
1
0.9
Overvalued vs. USD
0.8
0.7
0.6
0.5
0.4
Undervalued vs. USD
0.3
0.2
1,000
10,000
Log GDP per capita (current int'l $)
Source: World Bank, Morningstar
31
Following initial devaluation, PBoC reestablished a de facto peg at 6.40.
Onshore OTCdiscount to official fix (%)
Offshore discount to fix (%)
3.0%
 PBoC cuts official fix to 6.23 from 6.12
 PBoC says it will take cues from OTC
market when setting fix
 PBoC begins to intervene in onshore
OTC market to prop up RMB
 PBoC and state-owned
banks begin to intervene in
offshore market
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 2/1/2015 3/1/2015 4/1/2015 5/1/2015 6/1/2015 7/1/2015 8/1/2015 9/1/2015
Source: China Foreign Exchange Trading Center, CEIC, Morningstar
32
Beijing is unlikely to ignite a currency war in a bid to stimulate exports.
Beijing refrained from devaluing in financial crisis despite net exports
being nearly 8% of GDP in 2008.
Net export share of GDP(left)
USDCNY(right)
10.0%
8.00
9.0%
7.50
8.0%
Net exports are now less than 3% of Chinese GDP.
7.00
7.0%
6.50
6.0%
5.0%
6.00
4.0%
5.50
3.0%
5.00
2.0%
4.50
1.0%
Source: China Foreign Exchange Trading Center, CEIC, Morningstar
33
10/1/2014
7/1/2014
4/1/2014
1/1/2014
10/1/2013
7/1/2013
4/1/2013
1/1/2013
10/1/2012
7/1/2012
4/1/2012
1/1/2012
10/1/2011
7/1/2011
4/1/2011
1/1/2011
10/1/2010
7/1/2010
4/1/2010
1/1/2010
10/1/2009
7/1/2009
4/1/2009
1/1/2009
10/1/2008
7/1/2008
4/1/2008
1/1/2008
10/1/2007
7/1/2007
4/1/2007
4.00
1/1/2007
0.0%
Beijing’s main motives suggest dramatic devaluation unlikely
1. RMB internationalization
►
►
►
►
34
Beijing wants greater share of global trade settled in RMB and more important role
for RMB assets in global portfolios.
Inclusion in IMF's Special Drawing Rights basket would be a major milestone and
would require the RMB's value to be determined by market forces.
Freer-floating RMB is a necessary step toward long-term goal of RMB
internationalization.
Significant (30%+) devaluation would be a major setback.
Beijing’s main motives suggest dramatic devaluation unlikely (cont’d)
2. Curtail capital outflows
►
Capital has been flowing out of
China since summer 2014.
150
Net capital flows
100
►
►
►
Capital outflows undermine the
PBoC's RRR cuts, which pump
money into the economy.
De facto dollar peg exacerbates
capital outflows because it shortcircuits the pricing mechanism
that normally rebalances capital
flows.
Beijing hopes modest devaluation
will relieve pressure.
A large devaluation would risk
triggering significant outflows
Source: People’s Bank of China, CEIC, Morningstar
35
50
0
USD billions
►
-50
-100
-150
-200
-250
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
De-pegging could exacerbate capital outflows in the short term.
► Much
will depend on market expectations regarding the pace and magnitude of future
devaluation.
► If the market expects a fairly stable RMB, the incentive for capital flight wanes.
► If
the market expects the RMB to weaken significantly, capital outflows would surge as
investors look to get ahead of the move.
► Beijing is clearly aware of this risk, which is why:
1. PBoC took pains to assert that “there is no basis for persistent depreciation of RMB”
2. PBoC threatened to “severely punish illegal FX transactions…[to] maintain a
compliant and orderly capital flow.“
36
Defending the peg: Beijing’s reserves are massive on an absolute basis…
Official reserve assets
4,500
4,000
3,500
USD billions
3,000
2,500
2,000
1,500
1,000
500
0
Source: People's Bank of China, CEIC, Morningstar
37
…but appear more modest relative to the IMF’s reserve adequacy guidelines.
IMF’s adequacy guidelines assess reserves against:
1.
Export income
► Reflects loss due to a drop in external demand or
terms of trade shock.
► Target reserves: 10% of exports (fixed exchange rate)
or 5% (floating)
Broad money supply
► Captures residents’ capital flight from liquidation of
domestic assets
► Target reserves: 10% or 5% of M2
3.
Short-term debt
► Reflects debt rollover risks
► Target reserves: 30% of ST debt
4.
Other liabilities
► Reflects other portfolio outflows (e.g., equity & LT debt)
► Target reserves: 20% or 15% of other liabilities
Source: IMF, People's Bank of China, General Administration of Customs, CEIC, Morningstar
38
M2
STdebt
Other liabilities
Actual
3,500
3,000
USD billions
2.
Exports
4,000
2,500
2,000
1,500
1,000
500
0
Adequate reserves (low)
Adequate reserves (high)
Actual reserves
Global implications of a weaker China
How the infection spreads
39
How the infection spreads
Chinese
economy slows
Source: Morningstar
40
Exports to
China fall
Economy
weakens
Currency
depreciates
Capital flight
Economy
weakens
Defaults on
USD debt
Economy
weakens
Top exporters to China
Exports to China
TTM July, billion USD
as % GDP
Korea
183
13.0%
-7.3%
Japan
153
3.3%
-11.2%
USA
152
0.9%
-7.2%
Taiwan
149
30.5%
-3.7%
Germany
97
2.5%
-13.4%
Australia
83
5.7%
-25.8%
Malaysia
54
16.7%
-4.1%
Brazil
44
1.9%
-23.6%
Switzerland
40
5.8%
-4.1%
Saudi Arabia
39
5.2%
-34.2%
Thailand
38
10.1%
-3.6%
Russia
36
2.0%
-20.9%
South Africa
35
10.0%
-40.1%
Singapore
30
9.6%
-6.8%
Canada
26
1.5%
5.6%
France
26
0.9%
-9.2%
Vietnam
22
12.0%
22.1%
Angola
22
16.7%
-47.7%
United Kingdom
22
0.7%
-15.3%
Philippines
21
7.2%
-4.1%
Indonesia
20
2.3%
-27.4%
Chile
20
7.7%
-10.5%
Iran
20
4.7%
-42.5%
Note: Red text denotes countries where GDP impact of falling exports to China exceeds 0.5%.
Source: General Administration of Customs, World Bank, CEIC, Morningstar
41
% change YTD
Commodities outlook
China ended the last dark age for commodities.
It might begin the next one.
42
From 1980 to 2000, global mined commodity demand grew less than 1%
annually.
2000-2014 CAGR
GDP: 2.5%
Steel: 4.9%
GDP
Steel
300
1990-2000 CAGR
GDP: 2.8%
Steel: 0.9%
250
1980-1990 CAGR
GDP: 3.2%
Steel: 0.7%
200
150
100
Source: World Steel Association, World Bank, Morningstar
43
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
50
Metal prices are back at 1980 levels in real terms.
2000-2012 CAGR
Base: 7.9%
Precious: 12.9%
Base metals & iron ore
Precious metals
2012-2015
CAGR
Base: -18.2%
Precious: -13.0%
250
1980-1990 CAGR
Base: -1.6%
Precious: -7.9%
200
1990-2000 CAGR
Base: -1.3%
Precious: -2.2%
150
100
50
Index weights for base metals and iron ore: 27% Al, 38% Cu, 19% Fe, 2% Pb, 8% Ni, 2% Sn, 4% Zn
Index weights for precious metals: 78% Au, 19% Ag, 3% Pt
Source: World Bank, Morningstar
44
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
0
China ended a 20 year dark age for mined commodities.
World with China
World without China
8.0%
7.0%
Demand CAGR, 2002-2012
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
Source: Various, World Bank, Morningstar
45
China now dominates global demand for most commodities.
2012
2002
50%
45%
China share of global demand
40%
35%
30%
25%
20%
15%
10%
5%
0%
Coal Aluminum Steel*
(thermal)
Source: Various, World Bank, Morningstar
46
Lead
Copper
Zinc
Nickel GCF(PPP) Platinum
Gold
Potash PalladiumGDP(PPP)
Oil
Diamonds Uranium
Iron ore | China’s steel demand has faltered amid the real estate downturn.
Chinese steel demand drivers
Chinese iron ore supply
Wire
10.0%
5,000
4,500
5.2%
5.0%
HRC
CRC
Iron ore (right axis)
160
140
4,000
120
0.2%
-1.2%
-0.1%
-1.8%
-5.0%
RMB per tonne
0.0%
-10.0%
3,000
2,500
2,000
100
80
60
1,500
-10.1%
40
1,000
-15.0%
500
-16.8%
0
-20.0%
Floor space
started
Autos
Ships
Refrigerators
Steel
production
Iron ore
(domestic)
Iron ore
(imports)
Source: National Bureau of Statistics, China Iron and Steel Association, CEIC, Morningstar
47
20
0
USD per tonne
3,500
Iron ore | China’s steel consumption has already peaked.
48
Iron ore | But China’s steel stock will continue to grow….
49
Coal |Plunging Chinese import demand has dragged down seaborne prices.
Chinese coal volume
2008-13 CAGR
2014
7M2015
60%
90
52%
Chinese electricity production
50%
80
500
40%
70
60
20%
9%
USD per tonne
20%18%
11%
9%
6%
4% 3%
0%
400
50
300
40
30
0% -1%
-3%
-5%
-10%
200
Rotterdam
Newcastle
Richards Bay
Indonesia
China domestic (right axis)
20
-11%
-20%
10
-30%
100
50
8/1/2015
7/1/2015
6/1/2015
5/1/2015
4/1/2015
3/1/2015
2/1/2015
1/1/2015
12/1/2014
11/1/2014
9/1/2014
Source: China Electricity Council, China National Bureau of Statistics, China General Administration of Customs, CEIC, Morningstar
10/1/2014
8/1/2014
7/1/2014
Imports
6/1/2014
Domestic
5/1/2014
All others
4/1/2014
Coal-fired
3/1/2014
Total
2/1/2014
-40%
0
1/1/2014
0
-34%
RMB per tonne
30%
10%
600
Coal | China’s power demand will remain weak amid economic rebalancing.
51
Coal |Coal will continue to lose share in China amid low power demand growth.
52
Copper |Key copper end-markets have weakened in China.
3.80
20%
Cu price USD/lb
2013
2014
2015 ytd
3.60
3.40
15%
3.20
10%
3.00
2.80
5%
2.60
2.40
0%
2.20
2.00
-5%
Floor Space Under Construction
Elec Transmission
Source: CEIC, NBS, Morningstar
53
Auto production
Copper |Chinese demand surged over the past decade, while falling elsewhere
World ex China
China
Refined copper consumption (tonnes)
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
2000
2001
Source: ICSG, World Bank, Morningstar
54
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Copper |We expect Chinese demand growth to wane amid economic rebalancing
70
China 2013
Cu intensity of GDP
60
50
China 2000
40
30
20
10
0
10,000
20,000
30,000
GDP/capita
Source: ICSG, World Bank, Morningstar
55
40,000
50,000
60,000
Uranium | Japan has begun to restart its nuclear reactors
56
Uranium | China’s reactor fleet will quadruple in size in 10 years
57
Uranium | Prices must rise to incentivize new supply
58
Uranium | Uranium is a second chance at the China growth story
59
Agriculture| China now eats more like a rich country than a poor one.
60
Agriculture | India’s caloric gains in the next decade will exceed China’s of the
last decade.
61
Agriculture| Africa’s caloric intake will rise by nearly the total caloric intake of the
US.
62
Agriculture | Crop yields must rise to meet Indian and African food demand.
63
Agriculture | Potash demand growth to 2025: 2.8% annually (2005-2015: 2.7%)
64