Portfolio Analyst, River Capital Growth Fund, River Capital

Vishal Hargovan

Portfolio Analyst, River Capital Growth Fund

River Capital

Thematic (Sector/Industry)

Initiating 1 year USDCNH Vanilla Call Option with Strike 7.0000. This trade is one way to take advantage of/hedge against potential currency devaluation in the Renminbi. It is effectively a call on the USD/put on the CNH. Admittedly, not my normal style of value based equity investing, but this trade aligns with how I tend to think about mis-priced securities in general. I think the premium on the above call option (~5.5 basis points, SaxoBank Webtrader, or much lower, &lt;2 basis points, if you are an Insto trading through an FX desk) is under-priced as it does not fully factor in the heightening tail risk of major capital flows out of China. Too much faith is being put in the Chinese government supporting the Renminbi when, in my view, it&rsquo;s in their long term interests to allow their currency to devalue.

Initiating 1 year USDCNH Vanilla Call Option with Strike 7.0000. This trade is one way to take advantage of/hedge against potential currency devaluation in the Renminbi. It is effectively a call on the USD/put on the CNH. Admittedly, not my normal style of value based equity investing, but this trade aligns with how I tend to think about mis-priced securities in general. I think the premium on the above call option (~5.5 basis points, SaxoBank Webtrader, or much lower, &lt;2 basis points, if you are an Insto trading through an FX desk) is under-priced as it does not fully factor in the heightening tail risk of major capital flows out of China. Too much faith is being put in the Chinese government supporting the Renminbi when, in my view, it&rsquo;s in their long term interests to allow their currency to devalue.

Systemic problems in China – Is the Renminbi set to tumble?

Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Macroeconomics

We are calling for another rate cut and 3 further 50 bps cuts of the reserve requirement ratio in the first half of 2015, with the next rate cut being an increasing chance of late March (vs our original expectations of late Q2). In addition to&nbsp; a cut in lending rates, we believe there is a growing need to cut deposit rates further, if the current deflationary pressures remain. The central bank will desperately want to avoid a period of negative real rates, due to the detrimental effect it could have on consumption and investment.

We are calling for another rate cut and 3 further 50 bps cuts of the reserve requirement ratio in the first half of 2015, with the next rate cut being an increasing chance of late March (vs our original expectations of late Q2). In addition to&nbsp; a cut in lending rates, we believe there is a growing need to cut deposit rates further, if the current deflationary pressures remain. The central bank will desperately want to avoid a period of negative real rates, due to the detrimental effect it could have on consumption and investment. 

CHINA MACRO: Brining forward our expectations of monetary easing

China A-shares closed down almost 8% on Monday, on heavy volumes, the largest fall since February 2007. Whilst there were several negative announcements (corruption crackdowns, insider selling at SOEs, regulator speeding up IPO approvals), the KEY reason for the move was the margin trading suspension at three of the largest brokers in China. The brokers, banks and insurance sectors were all limit down. Below we look to explain:<ol><li>What changes to margin trading have been made, and the implications </li><li>How large margin trading in China is </li><li>Does this mean the government wants the stock market down </li><li>Our view on A-share market going forward </li></ol>

China A-shares closed down almost 8% on Monday, on heavy volumes, the largest fall since February 2007. Whilst there were several negative announcements (corruption crackdowns, insider selling at SOEs, regulator speeding up IPO approvals), the KEY reason for the move was the margin trading suspension at three of the largest brokers in China. The brokers, banks and insurance sectors were all limit down. Below we look to explain:What changes to margin trading have been made, and the implications How large margin trading in China is Does this mean the government wants the stock market down Our view on A-share market going forward 

This week's flash-crash in China: thoughts and implications

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China Treasury (CHINA GOVT)

Systemic problems in China – Is the Renminbi set to tumble?

Initiating 1 year USDCNH Vanilla Call Option with Strike 7.0000. This trade is one way to take advantage of/hedge against potential currency...

Vishal Hargovan

CHINA MACRO: Brining forward our expectations of monetary easing

We are calling for another rate cut and 3 further 50 bps cuts of the reserve requirement ratio in the first half of 2015, with the next rate cut...

David Millhouse

This week's flash-crash in China: thoughts and implications

China A-shares closed down almost 8% on Monday, on heavy volumes, the largest fall since February 2007. Whilst there were several negative...

David Millhouse

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)