Posts tagged 'China'

Swimming naked in China

David joined the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012.

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| Jun 10 12:19 | Comment |

China Everbright Bank placed itself directly in the firing line of terrible puns last week when reports it had defaulted started to circle.

Thankfully, Anne Stevenson-Yang from J Capital read into the news a bit further than most:

The interbank defaults last Thursday provided definitive, if indirect, proof that the cash coming into China is for financial investment and interest arbitrage. It masquerades as a trade surplus but is not. With the tightening of the domestic central bank credit window, Chinese banks are heavily dependent on these inflows for the cash they need to roll over loans. That is why the banks immediately went into distress when regulators decided to clamp down on fraud on the trade account.

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China’s debt servicing cost and dat Minsky moment

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jun 04 12:48 | Comment |

A little update on China’s growing debt-to-GDP ratio, which has caused much alarm and puzzlement this year.

We’ve mentioned before a very interesting 2012 BIS paper on national debt servicing ratios, which found the following: Read more

Between cronyism and rebalancing in China

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 29 12:07 | Comment |

Chinese premier Li Keqiang on Monday:

China needs growth of about 7 percent to double per capita gross domestic product by 2020 from the level in 2010, Li said yesterday in Berlin after meeting with Chancellor Angela Merkel during his first trip abroad as premier.

Although China has a formal target of 7.5 per cent growth for this year, and that was still kind-of-maybe assumed to be the ongoing target figure for the next few years, no-one was hugely surprised at the declaration of a 7 per cent target.

Anyway, the IMF’s forecasting types have decided it might be time to stop clinging to hopes of 8 per cent Chinese growth this year (and 8.2 per cent next year). They cut forecasts for both 2013 and 2014 to 7.75 per cent. Read more

Japan’s mini crash: Blame China, not just Ben

Paul Murphy is the founding editor of FT Alphaville.

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| May 23 09:20 | Comment |

The Nikkei 225 was clearly over-cooked. But just how over-cooked, we found out on Thursday…

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About China’s capacity to absorb more capital

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 22 10:30 | Comment |

We’ve all heard, many times, the story that China’s capital stock is nowhere near that of more advanced economies, therefore it will inevitably increase. And we can count on continued efforts to build roads, buildings, airports, and other infrastructure — just look at how the less-developed eastern provinces have been pouring money into new projects, the argument has gone, more recently. Or went.

We really hope it’s not necessary, here, to go into the weaknesses of that argument. Here are a few places to start, but it’s partly a causal problem — does growth cause increased capital stock or vice versa? What kind of growth are we talking about, anyway? Read more

The short arm of the SEC

Paul Murphy is the founding editor of FT Alphaville.

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| May 16 10:30 | Comment |

So, there was evidence this week that the US authorities might finally be getting to grips with the Chinese reverse merger scandal, whereby a string of Chinese companies exploited lax listing rules to shake down naive American investors.

Executives at RINO International, a steel industry supplier, have been charged by the SEC with inflating revenues 15 fold in their US filings, while some of the proceeds from a reverse merger and $100m cash raising in 2007 were diverted to buy a house in Orange County, two Mercedes Benz cars and also funded shopping trips to the Chanel and Valentino stores in Beverley Hills. Most of the rest of the money was dispatched to China. Read more

An unusual bear market

| May 16 00:52 | Comment |

We are, of course, talking about iron ore which has slipped into bear market territory overnight (defined here as 20 per cent fall from a recent high).

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That sighing sound you hear from China

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 15 09:45 | Comment |

… is strategists everywhere cutting their GDP forecasts.

Last week Standard Chartered’s China economist Stephen Green and his team slashed their 2013 forecast to 7.7 per cent from 8.3 per cent. Their 2014 forecast was cut to 7.5 per cent from 8.2 per cent.

Today, BAML’s Ting Lu cut to 7.6 for both 2013 and 2014, from 8 per cent and 7.7 per cent, respectively. Read more

Chinese shadow banking: three different ones

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| May 13 13:37 | Comment |

That’s a big (click to enlarge) chart from Moody’s on how they define “shadow banking” in China, via a Q&A comment on the growth of the sector. Read more

No-one is impressed by China’s amazing April trade figures

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 08 09:15 | Comment |

The good news is China’s April trade figures are super high! The bad news is no-one believes them, which is fair enough because just a few days ago the Chinese foreign exchange authority virtually said that the export numbers are not reliable — it plans to crackdown on companies that appeared to be over-invoicing for exports as a way of skirting capital inflow restrictions.

The promise of a crackdown was taken seriously, but it’s believed to be much too late for the April data. Read more

China, yuan to really do this?

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 07 11:51 | Comment |

China’s State Council has announced intentions to carry out some potentially quite big reforms. From Bloomberg:

China signaled it will propose plans this year to allow freer flows of its currency in and out of the nation as part of measures to loosen control over the yuan and interest rates. Read more

China’s great rebalancing, or: where does the investment go?

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 06 09:06 | Comment |

The latest piece of Chinese data to hit those post-Q1 GDP nerves is today’s HSBC/Markit services PMI.

It gave a April reading of 51.1, down sharply from 54.3 in March, and was the lowest since August 2011: Read more

Where the Chinese credit is going…

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 01 10:51 | Comment |

After Chinese first quarter GDP missed expectations, there was some hope that the relatively strong manufacturing PMIs in March would point to a better second quarter.

Now that we know China’s April PMIs are definitely not supporting that notion, it is worth revisiting, again, the whole question of the country’s recent surging credit growth. The significance of the debt-to-GDP ratio can be argued over, and it’s impossible to say at what level it might become a big problem. But here are a couple of ideas to consider. Read more

Like a bear in a China speech

| Apr 29 15:40 | Comment |

By Theo Casey, marketcolor

This might be best considered an addendum to Kate’s Politburo detective work on Friday which highlighted China’s changing attitude to growth (now maybe less important) and financial risk (now probably more important). It’s a piece of the China recovery puzzle we don’t look at enough. Read more

Chinese leaders more worried about financial risks than slower growth

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 26 07:59 | Comment |

China’s Politburo Standing Committee, the country’s top decision-making group, held a special session yesterday to discuss the economy — apparently the first time they’ve held this sort of economy-focused meeting since 2004, according to Xu Gao at China Everbright Securities (via Bloomberg).

So what came out of it? It’s always hard to tell, but it probably wasn’t good news for anyone hoping for big stimulus measures. Read more

China’s growing debt, and Magnus on where it might be headed

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 24 13:08 | Comment |

These sorts of charts have been bothering a lot of people lately, including us:

Credit Rmb per GDP unit - UBS

This one, via UBS’ George Magnus, shows China’s debt back near a 2009, stimulus-era ratio. Only, this time, it’s without the stimulus-era boost to the economy. Read more

Abandon hope, all ye who look at today’s China flash PMIs

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 23 08:11 | Comment |

The China flash HSBC PMIs missed for April, staying barely positive at 50.5 and providing little encouragment for those hoping that the first quarter GDP growth was an anomaly. Here’s the table of main index components:

China flash PMI table April 2013 - HSBC  Read more

China’s post-modern macro data (or, when Q1 is not Q1)

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 22 09:35 | Comment |

It turns out that China’s official statisticians might not have adjusted for 2012 being a leap year in the Q1 accounts. Plus, there have been big sampling changes that render the numbers even more subjective than we thought…  Read more

China’s credit-to-GDP ratio, updated (and why it matters)

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 17 10:56 | Comment |

Following on from our post on Monday comparing China’s relatively low GDP growth and its relatively high levels of new credit…

Here are some updated charts from Michael Werner of Bernstein Research, which show that the total stock of non-government and non-financial debt to nominal GDP continued to climb to new levels in Q1 (it was 193 per cent at the end of 2012): Read more

China’s Pettis moment

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 16 11:30 | Comment |

The reactions to Chinese macro data tend to go something like this…

Beat: Bulls are okay with this. Bears say it’s unsustainable, usually because of inflationary risks, policy tightening risks, credit risks, or the imbalances. FT AV commenters say the numbers are made up anyway.

Miss: Bears are okay with. Bulls say not to worry as it means more stimulus/loosening will happen. FT AV commenters say the numbers are made up anyway. Read more

China is having a credit-fuelled non-recovery

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 15 13:44 | Comment |

Every strategist around, it seems, was expecting an increase in China’s growth rate after the recent credit surge. Of course… it didn’t happen.

Yet much of the reason for those expectations of credit tightening are still there: credit really surged, particularly in March.  Read more

WMPs and China’s shadow banking whack-a-mole game

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Apr 03 10:10 | Comment |

The China Banking Regulatory Commission last week issued several strict-sounding new rules applying to the issuance of Wealth Management Products. The investment products have seen massive growth in the past year, with assets tripling to RMB10tn in the past two years, equivalent to 10 per cent of all China’s bank deposits.

Apart from upsetting share prices of mainland Chinese banks, what are the new rules actually going to achieve — if anything? Read more

China PMIs back to bullish

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Mar 21 06:54 | Comment |

The China flash manufacturing PMIs have beaten expectations this month, coming in at 51.7 compared to 50.4 in February, and above the forecast consensus of 50.8. Here’s the table of component directions:

China flash PMI March 2013 table  Read more

The best laid plans of miners and men

| Mar 20 01:11 | Comment |

It was supposed to be one of the best trades of 2013 – buy mining stocks to get leveraged upside to the global economic turnaround. But as we approach the end of the first quarter, only one half of that equation is working. The world economy is recovering strongly but the big miners are being well and truly left behind – Australian Financial Review.

Yep, the miners as a ‘leveraged play on global growth” is not going exactly to plan: Read more

China’s shale frenzy and the technology hurdle

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Mar 12 10:50 | Comment |

Hardly anyone, it seems, believes that China’s shale gas efforts are going to hit paydirt any time soon.

Reuters wrote yesterday that the shale gas revolution risks ‘running further off track’ — and this is before it has even begun to produce any significant volumes. Read more

China’s sluggish, narrow-based recovery

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Mar 11 06:20 | Comment |

A big stack of official Chinese economic data was released over the weekend and it paints a somewhat mixed picture of the country in 2013.

The short version is that some growth indicators were significantly weaker than expected, but others beat consensus forecasts — and consumer inflation appears to be on the rise again, even when the new year effect is discounted. This comes after strong export growth and weak import data surprised everyone late last week. Read more

China’s 2013 targets, and what they (probably) mean

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Mar 05 10:09 | Comment |

China’s National People’s Congress annual plenary began today, with soon-to-be-former premier Wen Jiabao outlining the official economic targets for 2013. We’ve written a few posts lately about how China’s growth has become increasingly driven linked to credit and, particularly, fast-growing shadow finance. More recently, there are signs the authorities are feeling less comfortable with letting shadow finance run riot — but at the same time, its role in fuelling growth makes a big or sudden curtailment look unlikely.

The targets announced today added to signs of discomfort with unchecked credit growth, according to various China watchers. Read more

The pollution constraint on China’s future growth

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Mar 04 11:15 | Comment |

The 12th National People’s Congress convenes tomorrow in Beijing and, by the time it ends, Xi Jinping will be named head of state and Li Keqiang will be appointed premier.

There’s naturally much speculation around the signals for policy direction that might emerge. Although the events are more akin to formalities than actual decision-making fora, they are being watched closely for clues about the new leadership’s appetite for reforms — which may be revealed through bureaucratic reshuffles, as the FT’s Jamil Anderlini explains. Read more

Deflating shadow credit in China

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Feb 27 08:59 | Comment |

First, a reminder of the degree to which China’s growth has been increasingly fuelled by credit over the past few years:

China credit to GDP ratio (including shadow financing) - Credit Suisse

The chart above doesn’t quite show it, but non-bank credit growth outpaced bank loans last year. The rise of China’s shadow banking scene has happened very rapidly — much of the growth only happened since 2009. Read more

The Chinese PMI circus [Updated]

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Feb 25 09:50 | Comment |

The flash HSBC/Markit China PMI number for February: 50.4. That’s a four-month low and quite a drop from 52.3 of January. Yet, as HSBC’s Hongbin Qu reminds us, it’s also the fourth consecutive month of expansion above 50 — the level which demarcates between above-trend and sub-trend growth.

So, what to make of it? Well firstly, Chinese New Year happened in February and, yes, you probably need to treat January and February data with caution because this holiday a) can fall in either month, and b) is huge. Read more

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