Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


Cross Asset Strategy

<ul>
<li>Investors are overly pessimistic, but China may already be a contrarian ‘buy’ 
</li>
<li>Latest economic data show positive surprises. GDP momentum is rising but investor positioning data evidence another big cut in exposure to China</li>
<li>Monetary policy stable and supportive. No sign of credit bust, or boom. Great potential for policy ‘pivot’ later in 2022
</li>
</ul>


Investors are overly pessimistic, but China may already be a contrarian ‘buy’ 

Latest economic data show positive surprises. GDP momentum is rising but investor positioning data evidence another big cut in exposure to China
Monetary policy stable and supportive. No sign of credit bust, or boom. Great potential for policy ‘pivot’ later in 2022



<ul>
<li>Chinese net capital outflows are again picking up to a US$600 billion annual clip. Chinese Yuan has also been under-pressure from the strong US dollar</li>
<li>People’s Bank (PBoC) forced to tighten domestic monetary conditions to help Yuan, despite COVID-19 lockdowns</li>
<li>Tighter Chinese Liquidity hurts World economy, reinforcing recession threat and hurting commodity markets</li>
</ul>


Chinese net capital outflows are again picking up to a US$600 billion annual clip. Chinese Yuan has also been under-pressure from the strong US dollar
People’s Bank (PBoC) forced to tighten domestic monetary conditions to help Yuan, despite COVID-19 lockdowns
Tighter Chinese Liquidity hurts World economy, reinforcing recession threat and hurting commodity markets


Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

<ul><li>In Depth: Chinese firms bending over backward to offer foldable phones</li><li>Shanghai says no plan to seal off entire city of 25 million</li><li>Chinese stocks get another drubbing as uncertainty overwhelms investors</li></ul>

In Depth: Chinese firms bending over backward to offer foldable phonesShanghai says no plan to seal off entire city of 25 millionChinese stocks get another drubbing as uncertainty overwhelms investors

CX Daily: Chinese Firms Bending Over Backward to Offer Foldable Phones

Founder of Antler Capital

Stanley Tsai, CFA

Macroeconomics

<ul>
<li>In the absence of an outright LPR cut later this month, the latest RRR move's impact on the real economy may be rather modest. </li>
<li>Assuming CNY500bn of MLFs will be withdrawn in the coming months, the net injection this time around is CNY700bn, about 40% of an average month's new loans.</li>
<li>We would watch out for a potential bubble in the onshore credit market before incremental liquidity benefits the broader economy.</li>
</ul>


In the absence of an outright LPR cut later this month, the latest RRR move's impact on the real economy may be rather modest. 
Assuming CNY500bn of MLFs will be withdrawn in the coming months, the net injection this time around is CNY700bn, about 40% of an average month's new loans.
We would watch out for a potential bubble in the onshore credit market before incremental liquidity benefits the broader economy.


China Macro: RRR Cuts' Diminishing Impact

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Technical Analysis

FTSE China A50 Index / Technical Analysis

There has been a tendency to over-exaggerate bad news from China. This has been going on for a long time (years). Over the past three months there has been plenty of concerning news from crackdowns on Tech companies to changes in the education sector and developments in real estate.Despite all this bad news, the FTSE A50 Index has not moved lower since the end of July. Instead, the A50 Index is now beginning to bounce back, taking out decent levels and posting an important weekly close on Friday. Even the more troubled Hang Seng posted a bullish reversal week. If anything, this price action is more impressive in the face of a generally strong Renminbi.Once again it looks as though sentiment has been too stretched in China. Is the bad news already in the price? These charts suggest the answer to that, at least in the near term, is yes.

There has been a tendency to over-exaggerate bad news from China. This has been going on for a long time (years). Over the past three months there has been plenty of concerning news from crackdowns on Tech companies to changes in the education sector and developments in real estate.Despite all this bad news, the FTSE A50 Index has not moved lower since the end of July. Instead, the A50 Index is now beginning to bounce back, taking out decent levels and posting an important weekly close on Friday. Even the more troubled Hang Seng posted a bullish reversal week. If anything, this price action is more impressive in the face of a generally strong Renminbi.Once again it looks as though sentiment has been too stretched in China. Is the bad news already in the price? These charts suggest the answer to that, at least in the near term, is yes.

China

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100. 

Shanghai Stock Exchange Composite Index (SHCOMP INDEX)

Shanghai Stock Exchange Composite Index (SHCOMP INDEX)

Is It Time To Buy China?

Media pessimism about China has become exaggerated. The economy is not strong but latest data show acceleration, and the monetary backdrop is...

Michael J. Howell

China – Policy Switches-Off

We hear the tireless refrain that China is set to ease her fiscal and monetary policies. True, the COVID-19 lockdowns provide a decent excuse, but...

Michael J. Howell

CX Daily: Chinese Firms Bending Over Backward to Offer Foldable Phones

In Depth: Chinese firms bending over backward to offer foldable phones. Shanghai says no plan to seal off entire city of 25 million

Caixin Global

China Macro: RRR Cuts' Diminishing Impact

In the absence of an LPR cut, the impact of the latest RRR move may be limited. We estimate that net of MLF maturities, the liquidity boost is...

Stanley Tsai, CFA

China’s Rebound

China's indices from, the FSTE China A50 to the Hang Seng and Shanghai Composite, are all beginning to show signs of strength again

Shyam Devani