Zarathustra

13

China’s economy improves in November

China’s November data dump is upon us and shows an improving economy moving into the fourth quarter. We’ll begin with inflation. China’s CPI inflation increased slightly in November. Headline CPI inflation rose to 2.0% yoy from 1.7% yoy in October, slightly lower than consensus estimate of 2.1% yoy. On a month-on-month basis, CPI increased by 0.1% compared

1

Macau casino indicator bounces along bottom

Macau casino revenue growth picked up on a year-on-year basis in November. Gross revenue increased 7.9% yoy to MOP24,822 million, up from +3.2% yoy growth in October. On a month-on-month basis, revenue fell from record high in October according to Gaming Inspection and Coordination Bureau of Macau. Although growth rate picked up somewhat, it has

1

China’s rail cargo volume lifts

China’s rail cargo volume year-on-year growth improved from -5.4% in September to -3.2% in October. Compared with September, rail freight volume increased from 307 million tonnes in September to 325 million tonnes in October. This data point fits with some of the other recent data which suggest a pick-up in economic activity in the final

2

China data confirms muted bounce

Over the weekend, China’s National Bureau of Statistics’ released its own leading indicator, which rose in October, the fourth consecutive month of increase, albeit at a much slower pace. October’s leading index rose to 100.42. However, the September number has been revised downward from 100.49 to 100.36. The increase of the index for October is much

5

Shanghai bear growls again

Investors in China have had a few difficult years. Indeed, China has been surprisingly disappointing to a point that even bears like ourselves are often becoming too optimistic. Despite improving economic data, Chinese equities just do not care. the Shanghai Composite closed yesterday below 2000 for the first time since 2009. That is a post-crisis low. This makes Greek equities

0

China’s inbound FDI falls

China’s inbound foreign direct investment (FDI) fell slightly in October compared with last year. The Ministry of Commerce’s latest numbers show that capital utilised fell 0.24% compared with a year ago, improved from -6.8% yoy in September. For January to October, total FDI (capital utilised) amounted to US$91.74 billion, 3.4% lower than the same period

0

Chinese local governments attract shadow funding

Courtesy of Also Sprach Analyst. Debts of local government financing vehicles (LGFVs) in China have been a concern here. As the government pushed “growth stabilisation” to the top priority earlier this year, local governments have been announcing massive investment plans that most people now agree are fanciful. The most cited reason for these plans being not realistic

1

Chinese new home prices resilient

New home prices in China rose in 35 out of 70 cities according to data compiled by National Bureau of Statistics, up from 31 out of 70 cities rising in September. Of 70 cities, 18 of them saw new home prices saying flat, up from 17 in September, while 17 of cities saw new home prices falling,

0

Chinese capital outflow resumes

Courtesy of Also Sprach Analyst. People’s Bank of China has published the detailed tables for monetary statistics, which contain (as usual) the numbers for working out a rough estimate for capital flow. To my surprise, the latest numbers suggest that money outflow continued in October, and it is almost back to the rate we saw in summer

1

Burying China’s bad loans

The China Banking Regulatory Commission (CBRC) publishes the numbers for Chinese banking system. Total banking assets rose to RMB128.5455 trillion by the end of Q3, up from RMB126.7831 trillion in the Q2, and increased by 19.67% from a year early according to CBRC. Total banking liabilities rose to RMB128.2893 trillion, up from RMB118.8470 trillion. The all-important but

1

What is China’s new investment surge building?

Courtesy of Also Sprach Analyst Throughout the past many months, the perceived policy error of government stimulus have led parts of the government to think that it is inappropriate to stimulate like it did in 2008/09, fearing that it will fuel the real estate market, inflation, etc. As a result, despite the 20 trillion yuan in announcements

0

China turns to unorthodox finance

This year so far, with the exception of short-term loans, Chinese banks’ lending has not been strong. In fact, as we and many others have already pointed out, lending to non-financial corporations have been dominated by loans of short-term nature for the best part of the year, which pointed to possible weak appetite to commit

1

China’s new lending falls sharply in October

The People’s Bank of China has published aggregate financing figures for October. Net new aggregate financing for the month of October amounted to RMB1.29 trillion, down from RMB1.65 trillion in September. Most components of aggregate financing fell in October compared with September with the exception of corporate bond issuance, which increased from RMB227.8 billion in September to RMB299.2

1

Are Chinese corporate profits set to rebound?

One of the most important fundamental reasons why Chinese equities under-performed for the last year or two has been the fact that Chinese companies are seeing falling profits despite seemingly “strong” economic growth. While GDP growth has only slowed to 7.4% year on year in the third quarter, corporate earnings have been recording negative growth on a

0

A China bounce ahead?

China will publish the October’s macro data later this week. September and third quarter macro data strengthened the consensus expectation that finally economic activity is picking up in the fourth quarter after being disappointing for the best part of the year. While our medium and long term view remains more or less unchanged (i.e. pessimistic), activity will probably

2

Chinese banks rush to lend in late October

Last week I noted that Chinese big 4 banks saw drop in deposits and fall in lending in the first 28 days of October. For the first 28 days, the big four banks had made RMB125 billion of loans. But then, these same four banks rushed to lend RMB100 billion in the last three days of

0

China’s export machine still coughing

Courtesy of Also Sprach Analyst. Both the official and HSBC/Markit manufacturing PMIs showed that despite some sequential improvement, new export orders remain in contractionary territory. And although the official PMI shows a somewhat brighter picture, it is probably because of the seasonality present in the official data. Looking at export orders for each individual year,

0

China’s October lending appears weak

After the massive increase of banks’ deposit in September, Chinese banks saw massive decrease of deposits in the first 28 days of October while lending fell, according to 21st Business Herald. The big 4 banks (Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China) have seen a RMB1.8 trillion drop

7

China has stopped manipulating its currency

Mitt Romney claims that he will label China a currency manipulator on day one in office (if he wins). Various people have weighed in already as to whether Chinese currency is still being massively manipulated, whether China is the biggest currency manipulator of all time, and whether the Chinese yuan is actually massively undervalued at this point  (see Ezra Klein’s post

0

China’s casino indicator still weak

Macau casino revenue reached a record high, but growth remains sluggish. Casino revenue in October reached MOP27.7 billion, 3.2% higher than the same month a year ago according to Gaming Inspection and Coordination Bureau of Macau. This is much slower than the 12.3% yoy growth in September. On a month-on-month basis, revenue increased by 16.1%

1

More on China’s official PMI

Courtesy of Also Sprach Analyst. As we know, China’s official manufacturing PMI climbed back above 50 in September after two months of sub-50 reading, suggesting a return to slow expansion. Headline PMI increased from 49.8 to 50.2, in-line with market expectation. Looking into sub-indices, new orders climbed back above 50 to 50.4, the first reading

0

China’s own leading indicator improves

China National Bureau of Statistics’ own leading indicator improved further from the post-crisis low in June. The Leading index rose to 100.49 in September, while previous month’s figure has been revised from 99.63 to 99.81. The improvement in the Leading Index suggests that there is a good probability that economic activities will pick up in the

2

China’s rail cargo volume stabilises

One of the preferred gauges of economic activity by our dear vice premier Li Keqiang is showing signs of stabilisation. Rail cargo volume in China amounted to 307 million tonnes in September, increase slightly from 304 million tonnes. On a year-on-year basis, rail cargo volume fell 5.4% compared with September last year, recovering from 9.2% yoy drop in

2

China’s surplus surplus

State Administration of Foreign Exchange published the data for China’s third quarter balance of payments. Total current account surplus amounted to US$70.6 billion, while capital and financial account (excluding reserve assets) recorded a deficit of US$71 billion (including errors and omission), leaving a US$400 million balance of payments (excluding reserve account) deficit, which is balanced by

0

PBOC cash pump still whirring

Courtesy of Also Sprach Analyst. The People’s Bank of China injected RMB225 billion of liquidity in yesterday’s open market operation. PBOC offered RMB140 billion of 7-day reverse repo at 3.35% and RMB85 billion of 14-day reverse repo at 3.45%. The interest rates are unchanged in today’s operation. For the full week, however, PBOC remains in a net

5

More on China’s PMI

The HSBC/Markit China manufacturing PMI flash estimate for October improved from 47.9 to 49.1, the highest reading in three months. The headline PMI has been in contractionary territory (i.e. sub-50) for a whole year. There are noticeable improvements in various components, although some key sub-indices remain below 50. Both new orders and new export orders are improving,

1

China’s capital drain eases

Courtesy of Also Sprach Analyst The latest statistics from the People’s Bank of China suggest that while outflow continued into September, the size of the outflow has decreased compared with previous months. The change of the position for forex purchases of the PBOC detailed monetary statistics has swung back into positive territory after decreasing for two straight

0

What’s driving Yuan strength?

Last week, the PBOC finally caught up with the strength of Chinese Yuan in the market by setting the daily fixing of Chinese Yuan stronger. The strengthening of PBOC fixing continues into this week, with USDCNY daily fixing at 6.3106, the strongest level since June. The market price of the Yuan, on the other hand, has been

0

The mystery of Chinese shadow banking

Courtesy of Also Sprach Analyst. Shadow banking in China has been a growing problem since 2008. However, no one knows exactly how large it exactly is. Estimates usually put the size in the order of tens of trillion, but nobody can come up with an exact figure. Not even Xiao Gang, the chairman of Bank of China, one