China Macroeconomics & Academia

Christopher Balding

Thematic (Sector/Industry)

<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.

Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Macroeconomics

Ecstrat were amongst the first to highlight the explosive growth of working capital in non-financial companies in China. We monitor over 3,000 listed Chinese corporates and with 20% of those having now reported for 2015 we can start to draw some conclusions.<div class="content-highlight"><ul><li>The 'cash flow recession' in corporate China continues.</li></ul></div><div class="content-highlight"><ul><li>Almost all sectors have experienced a rise in receivable days when comparing 2015 to 2014.</li></ul></div><div class="content-highlight">Almost all sectors have seen an even larger increase in payable days, suggesting that the listed…</div>

Ecstrat were amongst the first to highlight the explosive growth of working capital in non-financial companies in China. We monitor over 3,000 listed Chinese corporates and with 20% of those having now reported for 2015 we can start to draw some conclusions.The 'cash flow recession' in corporate China continues.Almost all sectors have experienced a rise in receivable days when comparing 2015 to 2014.Almost all sectors have seen an even larger increase in payable days, suggesting that the listed…

Large Caps Squeezing SMEs in Early Reading of FY2015 Chinese Working Capital

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

* 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

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

We pointed it out in our previous notes <a href="https://www.smartkarma.com/insights/are-korean-tourism-stocks-inbound-bottoming" target="_blank" data-smartkarma-citation="insights:2664">Are Korean Tourism Stocks (Inbound) Bottoming?</a> and <a href="https://www.smartkarma.com/insights/2016-year-of-visit-to-korea" target="_blank" data-smartkarma-citation="insights:2422">2016 - “Year of Visit to Korea”</a> that the major inbound tourism stocks including <a href="https://www.smartkarma.com/entities/14940" target="_blank" data-smartkarma-citation="entities:14940">Paradise Co Ltd</a> , <a href="https://www.smartkarma.com/entities/107" target="_blank" data-smartkarma-citation="entities:107">Hotel Shilla Co Ltd</a> , and <a href="https://www.smartkarma.com/entities/16341" target="_blank" data-smartkarma-citation="entities:16341">Grand Korea Leisure Co Ltd</a> may be bottoming out and ready to turn the corner. The major driving force is the inbound Chinese tourists and their willingness to spend in Korea.The major Korean department stores had an outstanding same store sales results in this February, which is…

We pointed it out in our previous notes Are Korean Tourism Stocks (Inbound) Bottoming? and 2016 - “Year of Visit to Korea” that the major inbound tourism stocks including Paradise Co Ltd , Hotel Shilla Co Ltd , and Grand Korea Leisure Co Ltd may be bottoming out and ready to turn the corner. The major driving force is the inbound Chinese tourists and their willingness to spend in Korea.The major Korean department stores had an outstanding same store sales results in this February, which is…

"Korea Grand Sale" Driving Up Department Store Sales

China

Great Wall Motor Company Limited, through its subsidiaries, manufactures and sells pick-up trucks and sport-utility vehicles (SUVs) in China under branded names. The Company also researches and develops, and manufactures principal automotive parts and components for use in the assembly of pick-up trucks and SUVs.

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Great Wall Motor (2333 HK)

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

Large Caps Squeezing SMEs in Early Reading of FY2015 Chinese Working Capital

Ecstrat were amongst the first to highlight the explosive growth of working capital in non-financial companies in China. We monitor over 3,000...

Mark Artherton

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

"Korea Grand Sale" Driving Up Department Store Sales

We pointed it out in our previous notes Are Korean Tourism Stocks (Inbound) Bottoming? and 2016 - “Year of Visit to Korea” that the major inbound...

Douglas Kim

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