Goldman with the note. Slowly but surely they’re all falling in behind the MB view of China: China has been back in focus over the past month with a notable pickup in policy and market volatility. Ongoing regulatory pressures—reflecting a broadening of efforts beyond financial risk reduction to include concerns over anticompetitive behavior, data security,
Gavekal with the note. My takeaways are very simple: Stay away from Chinese stocks, always. CNY is going to fall. Is what just happened in China a game-changer? Is what just happened in China a game-changer? The government is openly nationalizing not just companies (for-profit education), but profit pools (by instructing Tencent and Alibaba how
Moody’s had downgraded Evergrande, making it a triptych of rating agencies: Moody’s Investors Service has downgraded the corporate family rating (CFR) and senior unsecured ratings of China Evergrande Group (“Evergrande”), the CFRs of Hengda Real Estate Group Company Limited and Tianji Holding Limited, and the backed senior unsecured ratings of Scenery Journey Limited. …”The downgrades
Yesterday we saw a nice rally in Chinese stocks and a bounce in hopes that the incipient global growth slowdown is ending before it even began. Why? This: China’s top leaders signaled more targeted support for the economy as they look to cushion growth in the face of resurgent pandemic risks, fueling a rally in
Not that I’d recommend buying them. The sovereign risk is far too great. And it is too much fun cheering from the sidelines as a self-sabotaging CCP does itself harm. Still, Chinese equities matters for many other asset prices beyond China. The crunch is a part of the post-COVID return to Chinese economic restructuring. The
Over the weekend China released its latest round of official PMIs with manufacturing fading at 50.4 and services also slipping to 53.3: New orders are also softening for both as well, and new export orders are falling away: All pretty much as expected as credit tightens. Yet there is no imminent rescue. Goldman with the
Evergrande appears to be going bust. It’s turning unruly and happening fast. Bloomie: China Evergrande Group’s crisis deepened after a court froze assets of its listed onshore subsidiary, spurring another selloff in its shares and bonds. The entire 20% stake in Shanghai-listed Langfang Development Co., held by the developer’s main onshore unit, was frozen from
Throughout Australia’s five-year China divorce, one the of most interesting features of relationship breakdown is how much of it is led by Beijing. CCP structural constriction, paranoia and arrogance are its own worst enemy, consistently leading to glass-jawed overreactions, withdrawal from engagement and cancelled deals. Now the world is witnessing the same phenomenon in China
The doom loop continues for Evergrande: Two more companies said China Evergrande Group failed to pay its bills on time, adding to signs of a cash crunch at the world’s most indebted developer. Huaibei Mining Holdings Co Ltd. filed a lawsuit against Evergrande in Anhui province, alleging a unit of the company missed payments, according
UBS with the note: In a relative context, is it time to turn more positive on Chinese equities? The 18.8% fall in MSCI China this month, among the worst five months in the last 20years, has now wiped out the relative outperformance since early 2017. Structurally we like Chinese equities. Tactically we’ve been underweight. How
Demographics is destiny, they say. China’s ageing population has long been considered the economy’s number one long-term headwind. The ‘One Child Policy’ implemented in the 1970s and abolished in 2016 was credited with preventing some 400 million births between 1979 to 2010. The policy initially created a demographic structure that was ideal for economic growth,
Via Sinocism: China Is Building A Second Nuclear Missile Silo Field – Federation Of American Scientists Satellite images reveal that China is building a second nuclear missile silo field. The discovery follows the report earlier this month that China appears to be constructing 120 missile silos near Yumen in Gansu province. The second missile silo
The doom loop devouring Evergrande dramatically accelerated yesterday after its failed special dividend gambit turned stock market crash: Down 13.5% with bonds trading at half face value. UBS put the boot into the stock as well. Having called the rout earlier this year, it doubled down and said the stock would halve again. S&P piled
BofA with the note: Credit easing holds the key in 2H •Despite the recent reserve requirement ratio(RRR)cut, mixed data in 2Q open adata-dependent phase of policy making. •In our view, export uncertainty and investment weakness in 2H will lead to credit easing and help stabilize total social financing (TSF) growth at around 10.7%. An unexpected
Bloomie runs a series of leading indicators for China. They are not comprehensive but aren’t bad, either as a general leading indicator: Bloomberg Economics generates the overall activity reading by aggregating a three-month weighted average of the monthly changes of eight indicators, which are based on business surveys or market prices. Note the weakness especially
China’s Three Red Lines policy for deleveraging property developers has pushed the largest and most highly geared to the edge of extinction. Everngrande is fighting on, pulling every string that it can: At least two of Hong Kong’s biggest lenders are reconsidering halts on mortgages for China Evergrande Group’s unfinished properties, after the decisions were
Evergrande. Remember the name. The Chinese megadeveloper is rapidly morphing into some kind of Chinese ‘Lehman Brothers moment’. The Three Red Lines policy that is designed to deleverage large developers has triggered this latest round of crisis. Evergrande is preposterously leveraged with its equity worth less than 10% of enterprise value, owing to huge debts
Three Red Lines is turning into a bloodbath for China’s formerly largest developer, Evergrande. Yesterday: 2025 bond fell to nearly half its value. Equity is now less than 10% of enterprise value, down 12% in the past week. It has emerged that the charming firm has been drawing down upon funds held in escrow from
The Chinese urbanisation rate is one of those megatrends that is rarely discussed but sets the course for asset market over decades. Bloomie has an odd piece on it today: China’s urbanization rate is set to beat previous international predictions over the next decade, providing an antidote to the country’s shrinking workforce and declining birthrate, an
TS Lombard with the note: Sub-consensus H1/21 growth has led us to downgrade our full year forecast to 8.8% yoy from9.3% yoy. But don’t be misled: this isn’t the start of a China crash, just a mark-to-market. GDP growth in Q2/21 came in at 7.9% yoy, and showed unexpected improvements in domestic demand as retail
Macquarie’s magnificent Viktor Schvets on the tough choices facing China: While quantifying grow this always more of an art than a science, in China it is even more so. Based on the Soviet-style production and growth targets (vs expenditure derived ex-post estimates elsewhere), China’s economic results are even more opaque than usual. This has created
Goldman with the note that pretty much sums up my view: China’s Q2 real GDP growth was reported at 7.9% yoy, marginally below market expectations of 8% yoy, but key activity indicators remained solid and surprised to the upside in June. June industrial production came in at 8.3% yoy, vs 8.8% yoy in May, though
China’s Q2 and June data dump is at hand. GDP came in at a robust 7.8% though quarterly it was 1.3% so annualised growth is still decelerating: The internals are slowly returning to normal as COVID distortions wash out. Industrial production is at 8.3%, fixed asset investment at 12.6% and retail sales 23% year-to-date: Turning
Here’s Premier Li Keqiang: …it is necessary to coordinate the economic operation in the second half of this year and next year, and strive to keep it within a reasonable range. In view of the environmental changes at home and abroad and the needs of market players, we should maintain the continuity and stability of
TS Lombard with the note. This is classic Chinese delusion in action. That the slowdown can be managed and won’t panic the CCP in due course… PBOC CUTS RRR, GOES TO NEUTRAL China inflation data have signalled stress in the real economy and given the PBoC room to move firmly into neutral to counteract slowing
China released its June credit data on Friday night and it was better than it has been for much of 2021. New yuan loans arrived at 3.67tr yuan with banks comprising 2.1tr yuan of that: This was the first monthly year-on-year growth in four at a modest 6%: M2 accelerated to 8.8%: But broad credit
Honestly, sometimes the great and the good are maddeningly slow on the uptake. A steep Chinese slowdown has been obvious for six months. Yet get this from BRIC doyen Jim O’Niell: So, now that the slowdown has arrived for the rear guard of analysts, let’s ask what comes next? The first signal that not all
All of this year we have been watching the evolution of China’s “Three Red Lines” policy for large property developers. The reason why is simple. Developers represent nearly half of China’s iron ore demand. They also impact local government funding which represents another 20% of construction demand via infrastructure. Today we have a number of
Bloomberg is running an interesting study on what it will take for China to surpass the US economically in the decades ahead. It is much more difficult than Australia’s crop of CCP useful idiots would have you believe. Music to my ears: If Xi delivers reform and Biden does not pass infrastructure stimulus then China
You can read the local China apologia from Xi Jinping’s cadre of local useful idiots today, Stan Grant and James Curran, both of whom continue to dodge the question: which parts of liberal democracy are they prepared to sacrifice for a better relationship with the CCP? Or you can read this excellent piece from Ho-fung
