• Current Reports  

    Published on July 3rd, 2015

    Later today we will publish our Growth & Markets Monthly, updating Gavekal’s dashboard of essential economic and risk indicators. The markets side of the equation is relatively straightforward this month: although investors have not switched into full risk-off mode, with the outlook for Greece’s eurozone membership as uncertain as ever ahead of this weekend’s referendum, there has been a clear diminution in their appetite for risk. What of the growth side of the equation? Here the signals are more nuanced, but on balance they point to only a modest acceleration in activity over the second half of the year; a verdict supported by yesterday’s US payrolls report...
    Published on July 3rd, 2015

    With the drama in Athens casting a pall over markets, what is the message from the Gavekal dashboard of economic and risk indicators? Overall, reasonably positive. Our main growth indicator suggests that the momentum of economic activity should pick up in the second half of the year. If correct, this would mark a repeat of the pattern seen in the last few years. Still, given the uncertainty associated with the Greek situation, there has been a sharp deterioration in a portion of our risk indicators. Somewhat more worrying has been a widening in US corporate spreads and the continued opening of short-term interest rate spreads. Subscribers to GK Data can gain access to the data underlying the charts by downloading the interactive PowerPoint files below (please note that these are large...
    Published on July 2nd, 2015

    While the world’s headlines are concentrating on Greece, the real drama in financial markets is happening much further to the East. Since its peak in mid-June, the Shanghai Composite Index has now fallen by almost -23%, putting mainland Chinese shares in what is generally accepted to be bear market territory. Meanwhile intra-day volatility has reached mind-blowing levels, with the index swinging by more than 6% from peak to trough in each of the last four trading days. Although what happens in the Shanghai market may not be directly relevant to most international investors, its fluctuations have profound implications for Hong Kong-listed equities. As always, however, assessing exactly what is going on in the mainland’s markets is a tricky business...
    Published on July 2nd, 2015

    While the world’s headlines are concentrating on Greece, the real drama in financial markets is happening much further to the East. Since its peak in mid-June, the Shanghai Composite Index has now fallen by almost -23%, putting mainland Chinese shares in what is generally accepted to be bear market territory. Meanwhile intra-day volatility has reached mind-blowing levels, with the index swinging by more than 6% from peak to trough in each of the last four trading days. Although what happens in the Shanghai market may not be directly relevant to most international investors, its fluctuations have profound implications for Hong Kong-listed equities. As always, however, assessing exactly what is going on in the mainland’s markets is a tricky business...
    Published on July 1st, 2015

    China’s status as the workshop of the world faces no serious challengers. Accounting for nearly 25% of global manufacturing value-added, it is by far the world’s largest single manufacturing economy. But the country’s leaders still seem discontented. China may have quantity, they fret, but it lacks quality. It is not enough for China to be a “big” manufacturer, they say, it must also be a “strong” one. With a spate of new industrial policies centered around the “Made in China 2025” initiative, Beijing is now aiming to push the technological level and sophistication of Chinese manufacturing up to German and Japanese levels. Are the leadership’s concerns about China’s manufacturing justified, given that few multinational companies are complacent about Chinese competition? In a word: yes. In recent years, China has made little progress toward its...