China Macroeconomics & Academia

Christopher Balding

Thematic (Sector/Industry)

Despite the promise of online retailing and its rapid growth, there are worrying signs that point to either a coming slowdown, data discrepancies, or unsustainable shifts in consumer behavior.  Though it is too soon to say for sure, what is happening, the warning signs are there.

Despite the promise of online retailing and its rapid growth, there are worrying signs that point to either a coming slowdown, data discrepancies, or unsustainable shifts in consumer behavior.  Though it is too soon to say for sure, what is happening, the warning signs are there.

<ol><li>Given the available data, we believe it indicates that Chinese consumer growth remains positive but significantly weaker than headline official numbers indicate.</li><li>Large retailers appear to be suffering near zero growth across a variety of products.</li><li>Online retailing is still growing rapidly but its rate of growth is slowing and remains responsible for only 10.6% of spending.</li><li>Due to the weakness in large retailers and strong but small market share of online retailers, this leaves only small and medium size retailers as driving official retail sales numbers. We find this a dubious conclusion.</li><li>The combined retail sales and physical output of consumer product data implies that retail and consumer spending is growing much closer to the 3-6% range than the official 11% retail sales growth.</li><li>Related services like transport and hotel is showing significant weakness that is more reflective of an overall weak retail and services sector.</li></ol>

Given the available data, we believe it indicates that Chinese consumer growth remains positive but significantly weaker than headline official numbers indicate.Large retailers appear to be suffering near zero growth across a variety of products.Online retailing is still growing rapidly but its rate of growth is slowing and remains responsible for only 10.6% of spending.Due to the weakness in large retailers and strong but small market share of online retailers, this leaves only small and medium size retailers as driving official retail sales numbers. We find this a dubious conclusion.The combined retail sales and physical output of consumer product data implies that retail and consumer spending is growing much closer to the 3-6% range than the official 11% retail sales growth.Related services like transport and hotel is showing significant weakness that is more reflective of an overall weak retail and services sector.

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

<ul><li class="p1">The idea of e-commerce as a disruptive force is not new, with consumers becoming increasingly comfortable making everyday purchases online or through mobile devices across many developed economies.</li><li class="p1">However, as we take a step back and examine the various states of digital commerce across different geographies, we find a number of constants in not only how winners in the digital commerce space rise to the top in each region, but also how these players develop lasting network effects that serve as the foundation of the wide economic moats we assign to many of the leading players in this industry across the globe.</li></ul>Analysts: R.J. Hottovy, Suruchi Jain, Daniel Mueller

The idea of e-commerce as a disruptive force is not new, with consumers becoming increasingly comfortable making everyday purchases online or through mobile devices across many developed economies.However, as we take a step back and examine the various states of digital commerce across different geographies, we find a number of constants in not only how winners in the digital commerce space rise to the top in each region, but also how these players develop lasting network effects that serve as the foundation of the wide economic moats we assign to many of the leading players in this industry across the globe.Analysts: R.J. Hottovy, Suruchi Jain, Daniel Mueller

The Global E-Commerce Handbook: Themes Investors Need to Know as Consumer Shopping Tendencies Evolve

Global Macro Strategy

Callum Henderson

Macroeconomics

* The multi-year USD rally has been powerful, but in my view will gradually end and reverse this year* Fed tightening is not necessarily USD-positive and will not be this time* The global economy needs a weaker USD, which will help loosen global monetary conditions* The focus of investors has switched from short beta to relative value - 'smart alpha'* Relative value in and between EM assets adds significant alpha to benchmarked portfolios

* The multi-year USD rally has been powerful, but in my view will gradually end and reverse this year* Fed tightening is not necessarily USD-positive and will not be this time* The global economy needs a weaker USD, which will help loosen global monetary conditions* The focus of investors has switched from short beta to relative value - 'smart alpha'* Relative value in and between EM assets adds significant alpha to benchmarked portfolios

Asia Calling: Relative Value in EM - From Short Beta to Smart Alpha

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>I tally 33 - mostly firm, mostly Asia-Pac - arb transactions currently being discussed and analysed on Smartkarma. Those arbs metrics and upcoming events are detailed below.</li>
<li>Two new deal was discussed on Smartkarma this week: <a href="https://www.smartkarma.com/entities/taiyo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15154:1" rel="noopener">Taiyo Holdings (4626 JP)</a> and <a href="https://www.smartkarma.com/entities/tkg-aikang-co-ltd" target="_blank" data-smartkarma-citation="entities:9800:1" rel="noopener">TKG Aikang (022220 KS)</a>.</li>
<li>Key updates/news also took place on: <a href="https://www.smartkarma.com/entities/webjet-group-limited" target="_blank" data-smartkarma-citation="entities:45177:1" rel="noopener">Webjet Group (WJL AU)</a>, <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, <a href="https://www.smartkarma.com/entities/bright-smart-securities-commodities-group" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities (1428 HK)</a>, and <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>.</li>
</ul>


I tally 33 - mostly firm, mostly Asia-Pac - arb transactions currently being discussed and analysed on Smartkarma. Those arbs metrics and upcoming events are detailed below.
Two new deal was discussed on Smartkarma this week: Taiyo Holdings (4626 JP) and TKG Aikang (022220 KS).
Key updates/news also took place on: Webjet Group (WJL AU), ENN Energy (2688 HK), Bright Smart Securities (1428 HK), and Toyota Industries (6201 JP).


Asia-Pac M&A Weekly Wrap: Taiyo Holdings, TKG Aikang, ENN Energy, Bright Smart Sec, Toyota Indd

China

Dongfeng Motor Group is a major Chinese automotive manufacturer engaged in the research, development, production, and sale of commercial and passenger vehicles, engines, and auto parts. The company offers a wide range of vehicles, including trucks, buses, sedans, SUVs, and new energy vehicles, alongside providing financing services. It is headquartered in Wuhan, China, and was founded in 1969.

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Dongfeng Motor (489 HK)

The State of Online Retailing in China

Despite the promise of online retailing and its rapid growth, there are worrying signs that point to either a coming slowdown, data discrepancies,...

Christopher Balding

Retail and Consumer Activity in China

Given the available data, we believe it indicates that Chinese consumer growth remains positive but significantly weaker than headline official...

Christopher Balding

The Global E-Commerce Handbook: Themes Investors Need to Know as Consumer Shopping Tendencies Evolve

The idea of e-commerce as a disruptive force is not new, with consumers becoming increasingly comfortable making everyday purchases online or...

Morningstar, Inc.

Asia Calling: Relative Value in EM - From Short Beta to Smart Alpha

* The multi-year USD rally has been powerful, but in my view will gradually end and reverse this year* Fed tightening is not necessarily...

Callum Henderson

Asia-Pac M&A Weekly Wrap: Taiyo Holdings, TKG Aikang, ENN Energy, Bright Smart Sec, Toyota Indd

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

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