China Macroeconomics & Academia

Christopher Balding

Macroeconomics

As we have noted numerous time before, the result of so much money and credit creation is that there is a lot more capital chasing fewer and fewer good investment options.  Furthermore, given the spillovers into global markets, bubbles in China can create rapid price increases elsewhere.This leads to two specific conclusions when looking for trading opportunities.  First, look for short opportunities in Chinese assets that have seen large rapid price increases.  This has happened repeatedly to…

As we have noted numerous time before, the result of so much money and credit creation is that there is a lot more capital chasing fewer and fewer good investment options.  Furthermore, given the spillovers into global markets, bubbles in China can create rapid price increases elsewhere.This leads to two specific conclusions when looking for trading opportunities.  First, look for short opportunities in Chinese assets that have seen large rapid price increases.  This has happened repeatedly to…

Silver Is the Latest Chinese Little Short

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

Thematic (Sector/Industry)

<ul><li class="p1">The recent rally in bulk commodity miners will end in tears.</li><li class="p1">Iron ore has risen to $60 per tonne from a bottom of $37 in December, with leveraged mining stocks more than doubling from recent lows.</li><li class="p1">We expect falling Chinese steel demand and rising Chinese steel scrap availability to cut iron ore prices by half.</li><li class="p1">Shares of several heavily indebted producers are likely to fall by more than 50%.</li><li class="p1">Our long-run forecasts are $30 per tonne for iron ore (versus consensus $55) and $75 per tonne for metallurgical coal (versus consensus $110).</li></ul>Analysts: David Wang, Daniel Rohr, Mathew Hodge &amp; Andrew Lane

The recent rally in bulk commodity miners will end in tears.Iron ore has risen to $60 per tonne from a bottom of $37 in December, with leveraged mining stocks more than doubling from recent lows.We expect falling Chinese steel demand and rising Chinese steel scrap availability to cut iron ore prices by half.Shares of several heavily indebted producers are likely to fall by more than 50%.Our long-run forecasts are $30 per tonne for iron ore (versus consensus $55) and $75 per tonne for metallurgical coal (versus consensus $110).Analysts: David Wang, Daniel Rohr, Mathew Hodge &amp; Andrew Lane

Dawn of the Scrap Age: Iron Ore and Met Coal Will Suffer as China's Scrap Supply Rises.

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.
​
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.

<div class="content-highlight"><ul>
<li>Every time the Chinese authorities try to wean the economy off monetary stimulus they are forced back into an ever diminishing cycle.  2015 is no exception.</li>
<li>The latest data releases support the view of a stimulus led recovery in China.  Kicking the 'reform' can down the road for a little while.</li>
<li>Unfortunately the impulse value of each stimulus is diminishing.</li>
<li>Due to the precipitous declines in commodities markets prior to this round of stimulus the commodities markets will behave differently from…</li>
</ul></div>


Every time the Chinese authorities try to wean the economy off monetary stimulus they are forced back into an ever diminishing cycle.  2015 is no exception.
The latest data releases support the view of a stimulus led recovery in China.  Kicking the 'reform' can down the road for a little while.
Unfortunately the impulse value of each stimulus is diminishing.
Due to the precipitous declines in commodities markets prior to this round of stimulus the commodities markets will behave differently from…


Hao Wang, CFA

We have quite a few market surprises this year, especially from China, not to mention those from Middle East. Here I would like to mention a <a href="http://paper.people.com.cn/rmrb/html/2016-01/04/nw.D110000renmrb_20160104_1-02.htm" target="_blank">very important article</a> published on the front page and the whole second page on People's Daily on Jan 4th. Though the article is only in Chinese and not covered by most of the foreign media, it gives probably the best explanation of the so-called supply-side reform and more importantly the intentions of top leaders on economic policies. Given that most of…

We have quite a few market surprises this year, especially from China, not to mention those from Middle East. Here I would like to mention a very important article published on the front page and the whole second page on People's Daily on Jan 4th. Though the article is only in Chinese and not covered by most of the foreign media, it gives probably the best explanation of the so-called supply-side reform and more importantly the intentions of top leaders on economic policies. Given that most of…

What You Might Have Missed but Should Not on China's Supply-Side Reform

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

China Suntien Green Energy / Event-Driven

<ul>
<li>AH Premia continues to trend slightly higher on average (see first chart below). Bumpy, but AH premia are up 3 of last four trading weeks. Quiddity Portfolio Alpha continues positive.</li>
<li>There continue to be some really big moves on pairs. This past week it was <a href="https://www.smartkarma.com/entities/china-suntien-green-energy-corp" target="_blank" data-smartkarma-citation="entities:17269:1" rel="noopener">China Suntien Green Energy (956 HK)</a> and <a href="https://www.smartkarma.com/entities/datang-international-power-generation-company-h" target="_blank" data-smartkarma-citation="entities:3664:1" rel="noopener">Datang International (991 HK)</a> - both widened sharply.</li>
<li>The data tables below update daily in the <a href="https://www.smartkarma.com/tools" target="_blank" rel="noopener">Tools</a> section of Smartkarma. The <a href="https://www.smartkarma.com/tools/quiddity/south-flow-monitor" target="_blank" rel="noopener">Southbound Flow Monitor</a> and <a href="https://www.smartkarma.com/tools/quiddity/ah-shares-monitor" target="_blank" rel="noopener">AH Pairs Monitor</a> are both there - free for all SK readers. Recently used tools are now sticky.</li>
</ul>


AH Premia continues to trend slightly higher on average (see first chart below). Bumpy, but AH premia are up 3 of last four trading weeks. Quiddity Portfolio Alpha continues positive.
There continue to be some really big moves on pairs. This past week it was China Suntien Green Energy (956 HK) and Datang International (991 HK) - both widened sharply.
The data tables below update daily in the Tools section of Smartkarma. The Southbound Flow Monitor and AH Pairs Monitor are both there - free for all SK readers. Recently used tools are now sticky.


A/H Premium Tracker (2 Wks to 13 Mar 26); AH Wider Again - Pharmas & Tech Too Wide

China

Tianqi Lithium is a Chinese new energy materials company specializing in lithium resource investment, extraction, and the production of advanced lithium specialty compounds. Its product portfolio includes battery-grade and industrial-grade lithium carbonate, lithium hydroxide monohydrate, lithium chloride anhydrous, and lithium metal. The company is headquartered in Chengdu, Sichuan Province, China, and was founded in 1992.

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Tianqi Lithium (9696 HK)

Silver Is the Latest Chinese Little Short

As we have noted numerous time before, the result of so much money and credit creation is that there is a lot more capital chasing fewer and fewer...

Christopher Balding

Dawn of the Scrap Age: Iron Ore and Met Coal Will Suffer as China's Scrap Supply Rises.

The recent rally in bulk commodity miners will end in tears. Iron ore has risen to $60 per tonne from a bottom of $37 in December, with leveraged...

Morningstar, Inc.

China - Late 2012-Early 2013 Repeat

Every time the Chinese authorities try to wean the economy off monetary stimulus they are forced back into an ever diminishing cycle. 2015 is no...

Mark Artherton

What You Might Have Missed but Should Not on China's Supply-Side Reform

We have quite a few market surprises this year, especially from China, not to mention those from Middle East. Here I would like to mention a very...

Hao Wang, CFA

A/H Premium Tracker (2 Wks to 13 Mar 26); AH Wider Again - Pharmas & Tech Too Wide

AH Premia continue to drift gently higher. Overall, spreads are middle of the last 52wk range but some are getting very wide again.

Travis Lundy

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