Massive kudos to Societe Generale for attempting to answer a question we’ve long wondered (but figured would be insanely difficult to estimate).
The question is: if China does have a ‘hard landing‘ — or anything significantly below the consensus — how will that affect assets x, y, and z? Read more
What IS a hard landing in China?
Well, BAML’s latest survey of fund managers defines it as less than 7 per cent growth. And incidentally, only 8 per cent of those surveyed believe it will happen, half the percentage of the November survey. Read more
Remember Nomura last year estimated there was a 1-in-3 chance of a hard landing in China?
Anyway, they’ve updated the index on which it was based. Nomura’s chief Asia economist, Rob Subbaraman, says the 1-in-3 odds indicated by the China Stress Index remain, but the hard landing is less likely: Read more
The farce of the eurozone’s debt crisis is understandably captivating, but is an even bigger situation developing in China? Credit-fuelled gullibility lies at the heart of most bubbles, but such gullibility provides quality fodder for fraudulent schemes too. No one notices on the way up. But Charles Kindleberger showed in his seminal history of financial manias that they start emerging on the way down. In this context, China’s newsflow is worrying indeed.
So begins the latest note from SocGen’s Dylan Grice. And it’s something of a treat. He’s puzzled that so few people are forecasting a hard landing for China given the developing distress in the highly speculative (and pivotal) sector of its economy. Read more
A new Nomura report puts the odds at one-in-three of a hard landing in China in the next three years, which they define as four consecutive quarters of sequential GDP growth at 5 per cent or less.
It’s a pretty epic paper, with numerous authors, charts, and historical references, so we’ll focus here on their key six reasons why they’re becoming more wary of a hard landing. Read more