China Economy

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Chinese shadow tightening hits realty funding

From Investing in Chinese Stocks. Beijing has the tightest mortgage lending policies. The first-home interest rate is 1.1x benchmark. Some banks in Shanghai still offer 5% discounts, Shenzhen 3-5%, the four big banks in Guangzhou offer the benchmark rate. A second-home is 1.2x benchmark in Beijing, 1.1x in the rest of the first-tier. Beijing homebuyers

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China moves to impose more capital controls

This just ain’t going away, via Caixin: China is stepping up supervision of the use of bank cards overseas, a move the foreign-exchange regulator says is needed to fight money laundering, terrorist financing and tax evasion. Starting from Sept. 1, banks will be required to report on a daily basis all cash withdrawals made via

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The US had sub-prime, China has ghost-prime

Rehypothecation is a banking process that pledges a single asset against multiple borrowings. It is behind all of the great financial booms and busts of history. It was the heart of the US sub-prime bubble as worthless assets were pledged against enormous quantities of structured products. It is the heart of the Australian housing bubble in

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Chinese banks turn Japanese

Via Capital Economics: The outlook for China’s banks is going from bad to worse. Pressure on the banking system has increased during the past year even though economic activity has recovered. And with a renewed slowdown now on the cards, the health of China’s banks looks set to deteriorate further in the coming years. Chinese

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Caixin China PMI sags

Not happy: Operating conditions faced by Chinese goods producers deteriorated for the first time in nearly a year in May. The fall in the headline index coincided with slower increases in output and new orders, while staff numbers were cut at a quicker rate. Subdued demand conditions underpinned a renewed fall in purchasing activity, albeit

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China’s PMI’s power on

First, the non-manufacturing index registered 54.5, up from 54 in April: Sub-sectors, the service business activity index was 53.5% , higher than last month 0.9 percentage points, the service industry growth rate has accelerated. In the industry sector, the business activities index, such as retail trade, rail transport industry, air transport industry, postal service industry,

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Why China is EM and vice versa

From Citi: ‘China-dependence’ is not an EM-specific phenomenon, of course. The rise in the world economy’s dependence on China is captured in Figure 1, which shows the relative contributions to global growth that come from China and the US. China contributed 43% of global GDP growth last year; the US, 17%. It has been almost

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Australian dollar hit as Moody’s downgrades China

Moody’s turns interesting: Moodys downgrades China to A1 from AA3 Changes outlook to stable (from negative) Says rating reflects expectations that China’s financial strength will erode somewhat over the coming years Says stable outlook reflects assessment that at the A1 rating level risks are balanced GDP will remain very large ; growth will remain high

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How fast will China slow?

Via SCMP: In a latest sign of the heat in China’s red-hot property market, an auction of nine plots of land scheduled for Monday in Jiaxing, a city about an hour’s drive from Shanghai, attracted at least 425 bidders. As a result, the authorities had to change the venue of the auction from a conference

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Beijing property freezes with shadow banking

Via Investing in Chinese Stocks. It seems like there are no transactions in Beijing’s housing market, and developers keep quiet out of fear reads the headline. Developers are used to playing on the edge of government restrictions, but the restrictions on converted apartments and credit tightening have shoved them over it via iFeng: 冰封的北京商住:新政后几乎零成交 开发商噤若寒蝉

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Chinese deleveraging campaign continues

As expected, from Reuters: China’s financial deleveraging will continue given that a regulatory clampdown on risky lending hasn’t “achieved its goals”, a state-run newspaper said in a commentary on Wednesday. The Economic Daily, which is run by China’s cabinet, published the article just days after Premier Li Keqiang said China is capable of maintaining stability

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Three takes on China’s slowdown

From the top, first Goldman: The modest retracement in large part reflects a reduction in concerns surrounding the potential for aggressive policy tightening, which our China economists had anticipated, as well as – albeit to a lesser degree – a strengthening of oil prices which in part reflected news that Saudi Arabia and Russia had

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Giant Chinese insurance ponzi hits the skids

Via Investing in Chinese Stocks. A leaked document circulating on the Chinese Internet shows one of China’s most aggressive sellers of universal life insurance is in trouble. Foresea Life was selling policies like hotcakes in order to fund parent Baoneng’s takeover attempt of Vanke. The chairman of Baoneng was banned from the insurance industry for

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China has not back-flipped to more stimulus

Ambrose Evans-Pritchard is getting over-excited about another Chinese back-flip today: China’s authorities are increasingly worried by stress in the country’s financial system and the sudden slowdown in economic growth, fearing that it may now be too dangerous to press ahead with their draconian crackdown on shadow banking. The People’s Bank (PBOC) began signalling late last

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Chinese house prices continue to slow

Chinese house prices for April are out and continue to slow albeit slowly with monthly growth of 0.7% and annual of 10.7%: 58 cities saw rising prices and 12 falling: First tier is falling fast back to zero. Second tier is slowing. Third and lower keeping on: Given lower tiers are where the excess supply

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China blinks!

So scream the headlines, via WSJ: President Xi Jinping’s call for financial stability ahead of a major leadership shuffle later this year led regulators to unleash a blitz of new rules. The banking regulator under new chief Guo Shuqing has cracked down on speculative investment practices that relied on borrowed money and has also imposed

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Chinese yield rocket finally flaming out?

Chinese interbank spreads have calmed a little since Chinese authorities eased off:   Bond kept selling yesterday but there’s finally a little big today: Bloomberg reports that it have been turning irrational: “No one knows what kind of indicator would suggest the campaign is over, and no one knows how long this process will last,”

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China begins another industrial downleg

From HSBC: The strong rebound in growth in 1Q17 has provided Beijing with a welcome opportunity to tackle the issue of financial deleveraging. This had led to a rise in onshore rates – up c35bp in April alone – even though US rates have been edging down. Like Chinese corporates, the country’s financial institutions have

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Citi warns on China

From Citi, China caution ahead: …risky assets don’t usually fare that well when EMRA is low… …some market commentators in recent weeks have highlighted that perhaps there is a major risk that consensus opinion is again overlooking the influence of China’s credit cycles, and thus perhaps overstating the potential contribution of future Chinese demand growth