Feb. 17, 2014, 3:42 AM
- Chinese aggregate financing, the broadest measure of credit, grew to a record 2.58T yuan ($425B) in January from 1.23T yuan in December and topped forecasts of 1.9T yuan.
- New local-currency lending soared to 1.32T yuan, the highest level since 2010, from 482.5B yuan in December and vs consensus of 1.1T yuan.
- New trust loans, which are receiving much focus due to the risk of defaults, halved to 106.8B yuan from 210.8B yuan a year earlier.
- The continued expansion in credit should help the economy keep its momentum, although it contrasts with the People's Bank of China's attempts to rein in the soaring debt and protect the stability of the financial system.
- "The PBOC is trying to take the punch bowl away but the banks are continuing to lend and keep the party going," says Société Générale's Guy Stear.
- M2, China's widest measure of money supply, +13.2% on year in January, in line, vs +13.6% in December.
- The Shanghai Composite +0.9%. (PR)
- ETFs: FXI, PGJ, GXC, FXP, CYB, YINN, HAO, CNY, KWEB, TAO, ASHR, CHIQ, CHIX, DSUM, YANG, MCHI, CQQQ, PEK, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, YXI, ECNS, CHIE, CHIM, KFYP, FCA, CHLC, TCHI, CHNA
Feb. 12, 2014, 2:55 AM
- China's exports accelerated to +10.6% on year in January from +4.3% in December and slayed consensus for a rise of just 2%.
- Imports increased 10% vs +8.3% and +3%.
- The trade surplus grew to $31.86B from $25.6B and vs forecasts for a drop to $23.65B.
- However, analysts are skeptical: they had expected that the long Lunar New Year holiday would drag on trade last month, whilst other economic data has been disappointing. They warned that the trade figures, as in the past, could have been boosted by fake transactions by traders looking to avoid capital controls and bring cash into China.
- "We find this strong level of export growth puzzling," says Nomura economist Zhang Zhiwei. "It is unclear to what extent the strong export data reflects the true strength in the economy." (PR)
- The Shanghai Composite is +0.3%.
- ETFs: FXI, PGJ, GXC, FXP, CYB, YINN, HAO, CNY, TAO, ASHR, CHIQ, CHIX, KWEB, DSUM, YANG, MCHI, CQQQ, PEK, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, YXI, ECNS, CHIE, CHIM, KFYP, FCA, CHLC, TCHI, CHNA
Feb. 9, 2014, 1:24 AM
- The People's Bank of China is prepared to tolerate "reasonable" volatility in money-market interest rates as it attempts to rein in soaring debt in the country.
- While the PBOC will ensure "appropriate liquidity," it won't fund growth that is dependent on investment and debt.
- "The massive borrowing and construction led by local governments in recent years" increased risks in the economy, the bank said. Such a model can "easily lead to rising debt and may squeeze credit for other players, especially small businesses."
- The PBOC's remarks come after repurchase rates spiked to high levels at various points over the past several months, causing ructions in stock markets. The bank credited a particularly sharp rise in June with taming excessive expansion in money and credit.
- ETFs: FXI, PGJ, GXC, FXP, CYB, YINN, HAO, CNY, TAO, CHIQ, ASHR, CHIX, KWEB, DSUM, YANG, MCHI, CQQQ, PEK, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, ECNS, YXI, CHIE, CHIM, KFYP, FCA, CHLC, CHNA, TCHI
Feb. 3, 2014, 8:43 AM
- In order to draw the necessary capital to pull emerging markets out of their swoon, real interest rates have to go higher, says Citigroup. A near-doubling of the benchmark rate in Turkey last week only pulled one-year borrowing costs up to 3.6%, less than half the average in the thee years prior to 2008. The real yield in Mexico (EWW) is about zero. In South Africa, it's 1.4% vs. 2% over the past decade.
- “When you have low real rates and try to finance your current-account deficits, it usually won’t work,” says Citi LatAm strategist Dirk Willer. “If the U.S. is repricing for higher rates, it’s very difficult for you to get away with lower rates. South Africa (EZA) and Turkey (TUR) are not safe yet.”
- EEM -0.5% premarket
- Related ETFs: EEM, VWO, DEM, EDC, DGS, EDZ, CYB, EEMV, SCHE, EEB, CNY, EDIV, BZF, IEMG, DVYE, EEV, EWX, BIK, BKF, CEW, PIE, ICN, ADRE, HILO, INR, EUM, FNI, EET, FXCH, GMM, PXH, INCO, EEMS, BBRC, EELV, FEMS, DGRE, EEME, AYT, EMDD, BICK, DBEM, EMCR, PGD, FEM, EWEM, EMLB, JEM, EMBB, EVAL, TLTE, EEHB, EGRW, FNDE, EMDG, EMHD, EMSA, EMFT, EMDR, QEM, QDEM
Feb. 3, 2014, 1:51 AM
- China's official non-manufacturing PMI slipped to its lowest level since December 2008 in January, falling to 53.4 from 54.6 in December.
- The drop adds to declining manufacturing PMI indices, although the trend has partly been attributed to the Lunar New Year as people traveled home for the holiday.
- ETFs: CYB, CNY, FXCH, FXI, PGJ, GXC, FXP, YINN, HAO, TAO, CHIQ, CHIX, KWEB, ASHR, YANG, MCHI, PEK, CQQQ, QQQC, XPP, YAO, CHXX, CHII, CHXF, ECNS, YXI, CHIE, CHIM, KFYP, FCA, CHNA, TCHI
Jan. 30, 2014, 1:17 PM
- “International monetary cooperation has broken down,” says India central bank boss Raghuram Rajan, a day after the Fed boosted the size of its taper and made no mention of melting-down emerging markets. Rajan joined counterparts from Turkey and South Africa this week in boosting rates to try and stem the slide in their domestic currencies.
- "The challenge is brought on by their own domestic policies," says former Fed Governor Randy Krosner. "It's unfair to say it's all the Fed's fault."
- Back in his IMF days in 2011, Rajan authored a report calling for the formation of a committee composed of representatives from the major central banks who would report on the spillover consequences of their individual policies. Good luck with that one.
- Emerging markets are getting a respite today amid a big rally in the West (of the West is rallying because of a respite in emerging markets).
- EEM +0.8%, VWO +1%.
- TUR +1.9%, EPI +1.7%, ARGT +0.5%, RSX +0.7%.
- Related ETFs: EEM, VWO, DEM, RSX, EDC, EPI, DGS, INDY, EDZ, CYB, SCIF, PIN, INP, EEMV, EZA, SCHE, EEB, CNY, EDIV, INDL, BZF, IEMG, DVYE, RUSL, EEV, BIK, EWX, BKF, CEW, PIE, ICN, ERUS, ADRE, HILO, INR, RUSS, INDA, SCIN, INXX, EUM, FNI, RSXJ, EET, FXCH, RBL, GMM, PXH, INCO, EEMS, BBRC, EELV, SMIN, FEMS, DGRE, EEME, EMDD, BICK, AYT, DBEM, EMCR, PGD, FEM, EWEM, EMBB, EMLB, JEM, EVAL, TLTE, EEHB, EGRW, FNDE, EMDG, EMHD, EMSA, EMDR, EMFT, QEM, RUDR, QDEM
Jan. 30, 2014, 2:03 AM
- Chinese manufacturing activity contracted for the first time in six months in January as HSBC PMI fell to 49.5 (flash 49.6) from 50.5 in December.
- The growth of output eased to a marginal pace and jobs were cut at the fastest rate since March 2009, HSBC says, while there were "marked falls in input costs and output charges."
- "A soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities," HSBC says.
- The Shanghai Composite is -0.7%. (PR)
- ETFs: FXI, PGJ, GXC, FXP, CYB, YINN, HAO, CNY, TAO, CHIQ, CHIX, KWEB, ASHR, DSUM, YANG, MCHI, PEK, CQQQ, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, ECNS, YXI, CHIE, CHIM, KFYP, FCA, TCHI, CHNA, CHLC
Jan. 24, 2014, 4:23 AM
- Asian shares have mostly fallen as investors have seemed to grow more fearful about the significance of poor Chinese manufacturing PMI data yesterday.
- Investors have sought safe havens such as the yen - the USD-JPY is -0.3% at ¥103 - helping to send the Nikkei -1.9%.
- "A correction could occur," says investment strategist Shane Oliver. "We have to expect more volatility. Shares are no longer dirt cheap, meaning the easy gains are behind us."
- The once place where the PMI data didn't seem to to have an effect today was China, whose Shanghai Composite rose 0.6%. Stocks were partly boosted by money market rates falling again following a $42B+ injection of cash this week from the central bank ahead of the Lunar New Year. The seven-day repo rate dropped 77 bps to 4.61%.
- "Bad news has been digested and liquidity has eased," says analyst Du Liang.
- China ETFs: FXI, PGJ, GXC, FXP, CYB, YINN, HAO, CNY, TAO, CHIQ, ASHR, CHIX, YANG, MCHI, DSUM, PEK, KWEB, CQQQ, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, ECNS, CHIE, YXI, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
- Japan ETFs: DXJ, EWJ, FXY, YCS, JGBS, JGBD, DFJ, JYN, NKY, DBJP, EZJ, EWV, YCL, SCJ, DXJS, JSC, ITF, JGBL, JPP, JPNL, JGBT, JPNS, FJP, JGBB
Jan. 22, 2014, 9:52 PM
- China January HSBC flash PMI: 49.6 versus 50.6 expected and 50.5 previous.
- This is the first print below 50 (the line separating contraction from expansion) in six months.
- New orders sub-index: 49.8.
- ETFs: FXI, PGJ, GXC, FXP, CYB, HAO, YINN, CNY, TAO, CHIQ, ASHR, CHIX, YANG, MCHI, PEK, DSUM, KWEB, CQQQ, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, ECNS, CHIE, YXI, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
Jan. 22, 2014, 2:58 PM
- So says the country's Beige Book - a quarterly survey of Chinese businesses and banks. Banks have money to lend, but "fewer and fewer firms are doing any borrowing ... credit is largely being siphoned off by a privileged elite." As the pointed remark might indicate, this Beige Book is not a creature of Beijing, but instead a private effort.
- "Bankers and the government may insist the credit spigot remains open, but it is not open for most and liquidity is not financing genuinely new economic activity.”
- China-related ETFs: FXI, PGJ, GXC, FXP, CYB, HAO, YINN, CNY, TAO, CHIQ, CHIX, ASHR, YANG, MCHI, PEK, DSUM, KWEB, CQQQ, QQQC, XPP, YAO, CHXX, CHII, FXCH, CHXF, ECNS, CHIE, YXI, CHIM, KFYP, FCA, TCHI, CHLC, CHNA, EWH
Jan. 22, 2014, 5:03 AM
- Chinese shares led Asian shares higher, with the Shanghai Composite rising 2.2% as stocks built on yesterday's gains following the injection of liquidity into money markets by the People's Bank of China in order to avert a cash crunch. The PBOC is expected to add more funds in operations tomorrow.
- "The cyclicals and the blue chips are leading the rebound today, which usually points at policy relief," says analyst Cao Xuefeng. "It's more a relief rally at this point."
- In Japan, the Nikkei rose 0.2% after the BOJ again maintained its ultra-loose monetary policy as is.
- Elsehwere, Hang Seng +0.05%, India +0.4%.
- ETFs: FXI, PGJ, GXC, FXP, YINN, HAO, CYB, CNY, TAO, CHIQ, CHIX, ASHR, YANG, MCHI, PEK, KWEB, DSUM, CQQQ, QQQC, XPP, YAO, CHXX, CHII, FXCH, CHXF, ECNS, CHIE, YXI, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
Jan. 21, 2014, 3:36 AM
- Having surged 153 bps yesterday, China's seven-day repurchase rate fell 88 bps to 5.44% today after the People's Bank of China injected over 255B yuan ($42B) into the financial system and expanded a loan facility in order to meet demand for cash ahead of the Lunar New Year.
- The PBOC's action helped the Shanghai Composite rise 0.9% and the Hang Seng 0.5%.
- Meanwhile, the shares of eight small companies jumped on their trading debuts today, prompting the Shenzhen Stock Exchange to warn about "blindly" speculating in IPOs. The stock moves highlight the demand for new listings following the end of a year-long moratorium on IPOs.
- ETFs: FXI, PGJ, GXC, FXP, YINN, HAO, CYB, CNY, TAO, CHIQ, CHIX, ASHR, YANG, MCHI, PEK, CQQQ, KWEB, DSUM, QQQC, XPP, YAO, CHXX, CHII, FXCH, CHXF, ECNS, CHIE, YXI, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
Jan. 20, 2014, 2:08 AM
- Chinese GDP slowed to +7.7% on year in Q4 from +7.8% in Q3 but topped consensus of +7.6%.
- On quarter, GDP +1.8% vs +2.2% and +2%.
- 2013 GDP +7.7%, as in 2012.
- Industrial production +9.7% on year in December vs +10% in November and forecasts of +9.8%.
- Retail sales +13.6% +13.7% and +13.6%.
- Urban fixed-asset investment +19.6% vs +19.9% and +19.8%.
- The value of new homes sold jumped 27% in 2013 to 6.8T yuan ($1.1T), the first time the figure has passed $1T (see also).
- The slowdown in growth comes as the Chinese government starts to implement a major reform program aimed at rebalancing the economy away from heavy industry and exports more towards economic liberalism and consumption while at the same time trying to cool a sizzling housing sector and reining in soaring debt.
- "Urbanization and investment demand are leading to rising sales volumes, while prices continue to gain," says economist Dariusz Kowalczyk. "China's growth remains heavily dependent on the real estate market."
- Growth has been "fairly resilient," says SocGen economist Yao Wei. "It is more of the outlook that we worry about, especially with the financial risk in the system."
- The Shanghai Composite is -0.7% and the Hang Seng is -0.8%.
- ETFs: FXI, PGJ, GXC, FXP, HAO, YINN, CYB, CNY, TAO, CHIQ, CHIX, ASHR, YANG, MCHI, PEK, CQQQ, KWEB, DSUM, QQQC, XPP, YAO, CHXX, CHII, FXCH, CHXF, ECNS, YXI, CHIM, CHIE, KFYP, FCA, TCHI, CHLC, CHNA
Jan. 19, 2014, 1:33 AM
- Prices for new homes in first-tier Chinese cities climbed over 15% in December, highlighting the failure of local property restrictions to cool the sector.
- Valuations jumped 20% on year in the southern business hubs of Guangzhou and Shenzhen, 18% in Shanghai and 16% in Beijing.
- Prices increased in 69 of the 70 cities tracked by the government.
- Meanwhile, Shanghai has set a growth target of 7.5% for this year vs an expansion of 7.7% in 2013, with the city looking to its new free-trade zone to help boost its economy. Shanghai's goal is the same as last year, although at least nine Chinese provinces have cut their targets.
- ETFs: FXI, GXC, PGJ, FXP, CYB, YINN, CNY, TAO, CHIQ, CHIX, YANG, PEK, MCHI, XPP, YAO, DSUM, CHXX, CHII, CHXF, FXCH, YXI, CHIM, ASHR, KFYP, FCA, TCHI, CHLC, CHNA
Jan. 18, 2014, 9:25 AM
- Many have predicted the demise of the China boom and were early, says Felix Zulauf at the Barron's Roundtable, but now it's more obvious "it's in a terminal stage." He's playing it by shorting the iShares MSCI Hong Kong ETF (EWH). The Hong Kong banking system is heavily exposed to mainland China, so when China goes, there could be a banking crisis in Hong Kong. The HK$ is pegged to the greenback, so the HKMA will defend it by hiking rates, smacking the heavily rate-sensitive economy there.
- It's been nearly a decade since Zulauf recommended gold miners, but now's the time the buy the GDX, he says. Gold (GLD) is "washed out ... those who wanted to sell gold have sold it ... Western investors, asset-allocators, ETF players have all sold their gold. The buyers? "Physical gold moved from Western to Eastern hands."
- After 30 years of declining yields, Zulauf isn't a secular bull on U.S. Treasurys, but sees mis-pricing in government paper, noting French 10-year notes yield 50 bps less than comparable U.S. ones. The 10-year Treasury yield could easily fall 75-100 bps and he's a buyer of TLT.
- China-related ETFs: FXI, PGJ, GXC, FXP, HAO, YINN, CYB, CNY, TAO, CHIQ, CHIX, ASHR, YANG, MCHI, PEK, CQQQ, KWEB, DSUM, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, ECNS, YXI, CHIE, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
- Gold and gold miner ETFs: GLD, GDX, GDXJ, NUGT, IAU, PHYS, DUST, SGOL, UGL, DGP, GLL, GLDX, DZZ, UGLD, DGL, DGZ, AGOL, DGLD, GLDI, RING, GGGG, JNUG, PSAU, TBAR, JDST, UBG
- Long-dated Treasury ETFs: TBT, TLT, TMV, TBF, EDV, TTT, TMF, TLH, SBND, ZROZ, DLBS, VGLT, UBT, TLO, LBND, TYBS, TENZ, DLBL
Jan. 17, 2014, 4:19 AM
- Asian shares are mainly lower as disappointing earnings results out the U.S. hurt sentiment.
- China's Shanghai Composite closes -0.9% for its third weekly loss. Investors stayed cautious ahead of GDP and other economic next week, while a surge of 43% in the shares of debutant Neway Valve served to highlight concerns that an upcoming wave of offerings will divert money from other stocks. The industrial valve manufacturer is the first company to hold an IPO following the end of a year-long moratorium on new listings.
- Elsewhere in Asia, Japan's Nikkei -0.1%, Hong Kong's Hang Seng +0.6% and India's Sensex is -1%.
- ETFs: FXI, GXC, PGJ, FXP, HAO, YINN, CYB, CNY, TAO, CHIQ, CHIX, ASHR, YANG, MCHI, PEK, CQQQ, KWEB, QQQC, XPP, DSUM, YAO, CHXX, FXCH, CHII, CHXF, ECNS, YXI, CHIE, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
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