Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

LR Research

Macroeconomics

The latest threat assessment from China watchers has, at least partially, focussed upon the Policy Banks.  China Development Bank, China Ex-Im Bank and China Agricultural Development Bank are the three policy banks.  Each has a different task in the Chinese system and each has been recapitalised and each is growing rapidly.  Our analysis finds that these are not the true new levers of domestic policy.  Investors should pay much more attention to specific Joint Stock Banks, County, and Urban commercial banks.  This is the area of real lending growth in China over the past few years.

The latest threat assessment from China watchers has, at least partially, focussed upon the Policy Banks.  China Development Bank, China Ex-Im Bank and China Agricultural Development Bank are the three policy banks.  Each has a different task in the Chinese system and each has been recapitalised and each is growing rapidly.  Our analysis finds that these are not the true new levers of domestic policy.  Investors should pay much more attention to specific Joint Stock Banks, County, and Urban commercial banks.  This is the area of real lending growth in China over the past few years.

Independent Insight Provider

Stewart Paterson

Taurus Advisors LLP

Friday saw the release of the Monthly Chinese monetary aggregates. M2 rose 11.6% year-over-year. Although this is one the lowest percentage growth rates in the past 20 years, the money stock is now so huge that the incremental growth remains outsized relative to both GDP and (form an FX point of view ) the equivalent growth in the USA. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/016/341/original/China-M2-growth-YoY-Last-Price_chartbuilder.png?1479113085" class="editor-image img-responsive" data-smartkarma-image-id="16341"></figure>Over the past 12 months China's money stock has risen from RMB136tr to RMB152tr (USD22.3tr at current fx rates) a growth of RMB16tr (USD2.35tr) in an economy that…

Friday saw the release of the Monthly Chinese monetary aggregates. M2 rose 11.6% year-over-year. Although this is one the lowest percentage growth rates in the past 20 years, the money stock is now so huge that the incremental growth remains outsized relative to both GDP and (form an FX point of view ) the equivalent growth in the USA. Over the past 12 months China's money stock has risen from RMB136tr to RMB152tr (USD22.3tr at current fx rates) a growth of RMB16tr (USD2.35tr) in an economy that…

Money Matters: Chinese Monetary Aggregates Point to Accelerating RMB Weakness.

China Macroeconomics & Academia

Christopher Balding

Foreign exchange reserves of the People’s Bank of China fell for the fourth consecutive month in October. The drop of 45.7 billion USD from September to October represents the largest month to month change in foreign reserves this year. Reserves now sit at $3.12 trillion USD, the lowest level since March 2011. Capital outflows, a rising USD and non-USD reserves valuation help explain the ongoing decline in Chinese foreign exchange reserves.Capital outflows remained substantial in September…

Foreign exchange reserves of the People’s Bank of China fell for the fourth consecutive month in October. The drop of 45.7 billion USD from September to October represents the largest month to month change in foreign reserves this year. Reserves now sit at $3.12 trillion USD, the lowest level since March 2011. Capital outflows, a rising USD and non-USD reserves valuation help explain the ongoing decline in Chinese foreign exchange reserves.Capital outflows remained substantial in September…

Asia focused research insights & advisory, Asia Advisors

Vinay Patel

Asia focused research insights & advisory

Asia Advisors

Asia Advisors is an independent financial advisory and research firm working closely with corporates and institutions to provide consulting solutions & research insights. We provide advisory services including capital solutions, business strategy and investment insights.
Firm is headed by Vinay Patel who has close to two decades of experience in research and business development at large, international investment banks such as HSBC and ICICI Securities. Led research efforts in areas of Macroeconomics, Asset Allocation & Investment Strategy for close to a decade in global & domestic research teams. As a business head in Singapore, advised top global investment management firms & Portfolio managers in Asia for India related investments.
Vinay was recently joined by Swapnil Manish, an investment banker and ex-ecommerce entrepreneur with more than 12 years of experience. Swapnil was the TMT banker at BNP Paribas and was part of several large M&A and ECM transactions (Bharti-Zain, Bharti Infratel IPO, Schneider-Zicom among several others). He's also had a stint as an ecommerce entrepreneur having launched & led Mumbai's first online grocery player.

Thematic (Sector/Industry)

The Indian Government has taken a significant step in curbing the parallel economy by removing Rs500 and Rs1000 notes from circulation and plans to replace it with new notes. People having high-value notes will need to deposit it in a bank and exchange it for new notes until end December'16 ( and in the process, any large volume of cash deposits if undertaken will attract the tax authorities). High-value currency notes have always served as convenient storage points of undeclared and/or illegal…

The Indian Government has taken a significant step in curbing the parallel economy by removing Rs500 and Rs1000 notes from circulation and plans to replace it with new notes. People having high-value notes will need to deposit it in a bank and exchange it for new notes until end December'16 ( and in the process, any large volume of cash deposits if undertaken will attract the tax authorities). High-value currency notes have always served as convenient storage points of undeclared and/or illegal…

Demonetisation in India: High-Value Currency De-Notified; Con.Discretionary to Slow; Rate Cut Likely

It is frequently said that trying to trade politics is a fools errand, but it does impact the macro-economic direction.  Yesterday, China announced Finance Minister Lou Jiwei would be stepping down in favor of Xiao Jie who managed the tax administration department within the Ministry of Finance.We remain skeptical as to the state of the Chinese economy, not just when focused on public finances, but due to industrial policy.  For instance, debt for equity swap appears poorly conceived and failing to address the fundamental problems.  Coupled with state owned enterprise mergers that make inefficient firms even larger while remaining inefficient fail to inspire confidence.

It is frequently said that trying to trade politics is a fools errand, but it does impact the macro-economic direction.  Yesterday, China announced Finance Minister Lou Jiwei would be stepping down in favor of Xiao Jie who managed the tax administration department within the Ministry of Finance.We remain skeptical as to the state of the Chinese economy, not just when focused on public finances, but due to industrial policy.  For instance, debt for equity swap appears poorly conceived and failing to address the fundamental problems.  Coupled with state owned enterprise mergers that make inefficient firms even larger while remaining inefficient fail to inspire confidence.

What Is the Impact of Chinese Finance Ministry Reshuffle

China

China Merchants Securities Co., Ltd. provides securities services. The Company offers securities brokerage, securities investment consulting, securities underwriting, and other services. China Merchants Securities also operates investment management.

China Merchants Securities Co Ltd (A) (600999 CH)

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China Merchants Securities Co Ltd (A) (600999 CH)

Chinese Policy Banks Not the Real Threat

The latest threat assessment from China watchers has, at least partially, focussed upon the Policy Banks. China Development Bank, China Ex-Im Bank...

Mark Artherton

Money Matters: Chinese Monetary Aggregates Point to Accelerating RMB Weakness.

Friday saw the release of the Monthly Chinese monetary aggregates. M2 rose 11.6% year-over-year. Although this is one the lowest percentage growth...

Stewart Paterson

Chinese FX Reserve Update for October

Foreign exchange reserves of the People’s Bank of China fell for the fourth consecutive month in October. The drop of 45.7 billion USD from...

Christopher Balding

Demonetisation in India: High-Value Currency De-Notified; Con.Discretionary to Slow; Rate Cut Likely

The Indian Government has taken a significant step in curbing the parallel economy by removing Rs500 and Rs1000 notes from circulation and plans to...

Asia Advisors

What Is the Impact of Chinese Finance Ministry Reshuffle

It is frequently said that trying to trade politics is a fools errand, but it does impact the macro-economic direction. Yesterday, China announced...

Christopher Balding

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