E.g., 17-08-2018
E.g., 17-08-2018
We have found 3122 results.
View by: Grid List
Sort by: Relevancy Date
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    A Military Embrace Brings Risks For Technology

    China’s government is making a determined effort to co-opt private technology companies to help modernize its military. The pressure to support this drive, known as “military-civil fusion,” creates new political risks for tech companies and their investors: they could face more Chinese government interference and a political backlash from abroad.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    How To Assess The Stresses On EMs

    Emerging market equities are officially in a bear market, with the MSCI EM index down -20% from its January peak. EM-related commodities are also hurting, notably copper which has fallen -18% since June. The central question now is whether one should steer clear of all EM assets, because the rout is general and likely to get worse; or if one should keep an eye out for buying opportunities here and there. With some trepidation, we advise the...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Show Me The Stimulus

    China's data releases for July showed that the easing measures of the last few months have yet to have an impact on the real economy, with industrial value-added, fixed-asset investment and retail sales all slowing. Further monetary easing measures will follow. But as Long argues, they are unlikely to lead to a major increase in credit growth. Instead any stimulus efforts are likely to be financed by an increase in local government bond...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Turkey Is A Big Fish, But No Whale

    The meltdown unfolding in Turkey is not a surprise (see A Turkish Vortex). However, it does raise the question of where we go from here, and whether the Turkish crisis is a symptom of a change in the investment environment.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Softening Up On SOE Deleveraging

    China this year ordered central SOEs to bring down their asset-liability ratio down by 2pp by 2020. That might sound like a modest change, but it means doing much more deleveraging in the next two years than in the last two. With policymakers now starting to ease policy, this aggressive hard target for deleveraging will likely become a soft one.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Fire Testing Of Asian Junk

    The strong US dollar, rising oil prices and a gathering trade war have sent capital fleeing from emerging markets. Asian high-yield debt has taken a hit with the benchmark (JP Morgan) index down -3% this year, sparking worries of a self-feeding cycle that ends with a debt crisis. We have taken a fairly constructive view on emerging economies due to their generally non-threatening macro-fundamentals. Hence, with EM asset prices stabilizing it is...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Biggest Question Of The Day

    Should we take Donald Trump literally when he says he wants to eliminate the US trade deficit? In this paper, Louis examines the different ways the US might hope to cut its trade deficit, including its bilateral deficit with China, and explores why the outlook for risk assets depends enormously on the US administration's real aims in launching its international trade war.

    7
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    No Good Choices For China

    China wants to show that it will stand up to US threats to escalate the trade war. Yet Yanmei argues that it has few attractive policy choices. It can neither back down from the confrontation nor retaliate enough to deter the US. With little prospect of a negotiated solution in the near term, Beijing is focused on stabilizing the domestic economy.

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Will Mergers Become A New Front In The Trade War?

    On July 25, Qualcomm canceled its US$44bn acquisition of NXP Semiconductors after it failed to get approval from Beijing before its self-imposed deadline. In this piece, Matt assesses the big question this failure raises: has China decided to use its merger-review process to punish US companies for the tariffs imposed by the Trump administration?

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    What Will Halt The Renminbi’s Fall?

    The momentum for a weaker renminbi is considerable, with the US ratcheting up its trade war with China and the Chinese government moving to easier fiscal and monetary policies. But Chen Long argues that the renminbi’s downside from current levels may prove limited even though the central bank is unlikely to intervene as much as it did in 2015-16.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Housing Inventories Hit Bottom

    The long decline in China’s housing inventories—the key factor driving the recovery in construction—now seems to have ended. After falling in 2015, 2016 and 2017, housing inventories are now on pace to end 2018 slightly higher. In this piece, Rosealea explains why this change will not spell the end of the construction cycle just yet.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Stemming The Tide Of Bond Defaults

    As China’s government shifts economic policy more explicitly into easing mode, will it relieve the growing strains in the corporate bond market? In this piece, Chen Long diagnoses the underlying causes of a recent wave of defaults that have spooked investors, and explains how the government is changing policy to ease that financial stress.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Don't Fixate On Fixed-Asset Investment

    If you believe China’s official statistics on fixed-asset investment, then capital spending is now collapsing across the country. But you probably shouldn’t believe those numbers, for reasons that Andrew explains in this piece. True growth in investment spending will slow in 2018, but much less catastrophically than the headline data suggest.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Video: China's Technology Strategy

    China has an ambitious industrial upgrading plan, called Made in China 2025, which targets Chinese leadership in about 30 technological segments. In this video interview Dan explains how the government aims to achieve this, how this plan differs from previous Chinese policy goals, and whether it is likely to succeed.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Time To Get Fiscal?

    China’s latest data reinforce an economic trajectory that is getting worrisome for policymakers, with weaker domestic activity, an escalating trade conflict and a greater-than-expected slowdown in credit growth. Further easing of monetary policy is definitely in the cards, but there is now rising pressure on Beijing to step up fiscal spending.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Biggest Winners In Real Estate

    China’s real-estate developers are getting hammered in stock and credit markets. But the largest of these firms are well-placed to ride out current strains, and are the main beneficiaries of accelerating consolidation and government policy. As the Chinese property market matures, the winners are likely to be a small group of the largest companies.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Chinese Juggernaut Will Roll On

    In 2015, I sat down with Sri Lanka’s then-new finance minister. The “teardrop of India” had recently elected a fresh government, kicking out a corrupt president widely regarded as in China’s pocket. Vowing to scrutinize all Chinese deals, the new leaders suspended a massive real estate project in Colombo harbor. “The high costs come from nothing other than corruption, but we do not want taxpayers to pay for the past decisions of a corrupt regime...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Audio & Transcript — Gavekal Research Call July 2018

    In this call Arthur Kroeber outlined his view on why President Donald Trump’s trade war is not a bluff, and is likely to escalate ahead of the US midterm elections in November; Andrew Batson explained the macro-level effects caused by all this uncertainty; and Chen Long discussed the market impacts in China and the country’s likely response.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Policy Headwinds For Chinese Stocks

    Chinese equities have finally had a few solid trading sessions after their steep decline in the latter half of June. But the CSI 300 index is still down -14% year-to-date, and betting on a rebound from here looks unwise. A confluence of factors has been pushing down the market—tougher financial regulation, weak data, a falling currency, and the trade conflict with the US. And none of these factors is turning positive, especially with the US...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Recession Of 2019

    Over the last three months, I have become increasingly concerned that a recession will hit the world economy in 2019. In this paper, I shall explain why. My reasoning is simple, and is based on the behavior of an indicator I have long followed, which I call the World Monetary Base, or WMB. Every time in the past that this monetary aggregate has shown a year-on-year decline in real terms, a recession has followed, often accompanied by a flock of...

    17
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Global Rise Of Chinese Smartphones

    Xiaomi and other Chinese smartphone makers are among the first Chinese consumer-goods companies to have gained significant market share outside of China. In this piece, Dan explains where their success has come from and assesses their prospects: Chinese smartphones may not displace Apple and Samsung, but can limit their gains in emerging markets.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A National Security Imperative

    Depending on commodity prices, in any given year China spends between US$250bn and US$400bn on imports of the “big five” commodities it needs to continue growing: oil, iron ore, coal, copper and soybeans. Before it can do that, it must first “earn” those US$250-400bn. Only then can it can turn around and buy the stuff the country needs to ensure its long-term growth.

    10
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Hard Yards For Emerging Markets

    Emerging markets have been hit by the combined effect of a stronger US dollar, tighter international liquidity and rising trade tensions, causing their currencies to fall more in the last few months than in the 2013 “taper tantrum”. The big fear for EMs is that the end of easy money globally creates a giant margin call. As a firm, we have tended to be upbeat on their prospects in this cycle, and it may be that a huge buying opportunity has...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Trade War And The US Cycle

    How will the US administration’s trade disputes affect the US economic cycle? In the worst case scenario, if Donald Trump follows through on all his threats the disruption to global supply chains could be great enough to push the world economy into recession. At this point, the greatest impact flows from the high degree of uncertainty about future actions.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Strategy Monthly: The Four Roads Ahead

    The first half of the year was not a great one for global equities, and the second half is clouded by risks: slowing growth, rising inflation, renewed political stress in the eurozone, and most of all the threat of massive protectionism by the United States. Louis Gave offers four scenarios of how things could play out, and Arthur Kroeber explains why it's time to start seriously worrying about a worst-case trade scenario.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The End Of Normal Trade

    The US may have backed down from imposing new restrictions on Chinese investment in the US. But it would be wrong to see this as a de-escalation of the US-China trade conflict. In this piece, Andrew argues that the tariffs taking effect Friday will mark the end of two decades of normal US trade with China, and the return of political uncertainty.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    A Rethinking Of Housing Subsidies

    China's government, worried about continued rapid growth in housing prices, is now reconsidering a major program for subsidizing housing sales. As Rosealea explains, this policy change shows the government is still more focused on curbing frothy housing prices than on boosting growth, and will weigh on housing sales in the rest of 2018.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The End Of Tech Codependency

    The US has backed away from the “nuclear” option of slapping new investment curbs on Chinese firms, but its likely use of export restrictions and tariffs on “strategic” sectors like semiconductors will hit all parts of the supply chain, regardless of nationality. At best chipmakers can expect to muddle through; at worst the industry takes a big hit.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    How China Can Fight Back In The Trade War

    China is a veteran in economic warfare. As the US prepares to hit China with trade and investment penalties, China can draw on years of experience and an arsenal of regulatory tools to craft a response. The local operations of US companies present a large target. In this piece, Yanmei explains how China is most likely to retaliate against the US.

    6
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Macro Update: More Stress, More Easing

    In this concise chartbook, Chen Long explains where the Chinese economy stands today. The business cycle has been surprisingly strong but is likely to soften more in the second half. Trade conflict with the US is raising uncertainty just as domestic credit stress increases. Policy is adjusting, but to smooth the growth trajectory not reverse it.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Trouble With Trade Retaliation

    When this week US president Donald Trump threatened to slap tariffs on an additional US$200bn of imports from China, on top of the US$50bn already targeted, the Chinese government immediately promised to retaliate in full proportion. The trouble is that retaliating will be a lot more difficult and painful than Beijing’s counter-threats make it sound.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Easing Won’t Help Chinese Equities

    When the White House rattled global markets earlier this week with its threat markedly to escalate the international trade war, mainland Chinese stock markets were hit the worst. That is not surprising, considering that the US administration’s threats were targeted specifically at imports from China. However, the fall in Chinese markets was so severe, and the subsequent recovery so anemic, in part because investors’ heightened fears over trade...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Restructuring Of Retail

    China’s rapid shift to online shopping is emptying malls and forcing retailers to close hundreds of stores. But at the same time, the big internet companies are investing billions to seek new growth from brick-and-mortar stores. In this piece, Ernan explains how Chinese retail is restructuring and where the growth opportunities are.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Empire Strikes Back?

    Over the last 70 years the global population has tripled. Yet in defiance of every Malthusian theory out there, the average citizen of the world has never known such a high level of material comfort as today. To start with the obvious, the world has almost entirely eradicated the famines that plagued entire regions just a few generations ago (this isn’t to deny the humanitarian catastrophes unfolding today in Yemen or Syria, but these are caused...

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Trade War Escalates. What’s Next?

    With the imposition of tariffs on US$34bn of imports from China last Friday, the US has expanded the trade war it launched two weeks earlier with steel and aluminum tariffs, mostly on friendly countries. More are likely to come by the end of the year: additional tariffs on China, and possibly levies on imports of cars and car parts (which again would mainly hurt US allies). It is possible that the US could pull out of Nafta. How worried should...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Parsing The Slowdown In Credit Growth

    China’s credit growth slowed to a new low in May, but the deceleration in real economic activity remains a moderate one—although sharp contrasts are now appearing among different indicators. In this piece, Chen Long explains why credit growth is likely to continue to slow, and how that will affect different parts of the economy.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The 5G Dream Will Not Be Denied

    Now that the US has backed away from putting crippling sanctions on Chinese telecom-equipment firm ZTE, China looks well-placed to achieve its dreams for 5G, the next wave of mobile technology. Huawei and ZTE may be effectively blocked from the US market, but they are well-placed to grab a significant share of the global market for 5G.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Video: When To Buy US Bonds

    With 10-year US treasury yields having failed so far to climb significantly above the 3% mark, investors are asking whether it is time to buy US long bonds. In this short video interview, Will presents a simple framework for approaching the bond market. With the yield curve flat by historical standards, and yields far below their natural ceiling set by returns on invested capital, investors should steer clear of long bonds.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Is A Crisis Brewing Over Taiwan?

    Ominous clouds are gathering over Taiwan, as China steps up displays of military force and its campaign of international isolation. Could this escalate into a replay of the 1995-6 Taiwan Strait crisis, or something even worse? In this piece, Yanmei assesses the rising risks, but argues that military conflict is still a remote possibility.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Marshals Over Markets: China Tightens Cybersecurity

    Our first DeepChina report takes a close look at Beijing's efforts to exert tighter control over the internet, the flow of commercial data, and the security of its technological infrastructure. China ia nor alone in toughening regulation, but its efforts are far more expansive, and raise more serious concerns for multinational firms.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    China Comes Off The Boil

    Chinese growth surprised on the upside in the early part of the year, but Andrew thinks that a gradual loss of altitude is now unfolding. This is mainly due to slowing property market activity, which increasingly displays late-cycle characteristics. This adjustment should not pose a major risk to other major economies, so long as other global factors do not become disruptive.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Property Tightening Is Back

    Chinese government policy for the property market is turning tighter, a shift that will weigh on housing sales and construction activity in the rest of 2018. But Rosealea cautions against overreacting, arguing that the downcycle in property is still likely to be a shallow one, and that policy will loosen again once market conditions weaken.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Urbanization Without Migration

    The story of China’s urbanization has long been the migration of people from the country to the cities. Not anymore: as Ernan explains, rural migration has slowed sharply, and is being replaced by the reclassification of rural areas into urban ones. Policymakers now prefer this “local urbanization,” even though it delivers less income growth.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Structural Change, Or A Return To The Mean?

    Chinese government bond prices have markedly outperformed treasuries for more than a year. This trend could be explained merely by cyclical factors, or that the Chinese fixed income market is going through a structural rerating, driven in part by the internationalization of the renminbi and the inclusion of Chinese government bonds in major benchmarks.

    8
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    An Attractive But Troublesome Market

    From June 1, China’s domestically-listed A-shares will be included in the MSCI Emerging Markets index, bringing the onshore market to the attention of many global investors for the first time. In this piece, Thomas examines recent developments in the A-share market, and outlines the promises and pitfalls of investing under China’s “regulatory firestorm”.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Video: The Hong Kong Peg Under Pressure

    The Hong Kong Monetary Authority has again been intervening in the foreign exchange market after it stepped in last month when the Hong Kong dollar fell to its weakest in 35 years. So far the HKMA has bought HKD62bn, selling almost US$8bn to defend the Hong Kong dollar’s peg to the US dollar. In this video interview, Tom Holland explains what’s going on, and why there is zero risk Hong Kong will be forced to devalue its currency.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Bond Yields Have Further To Fall

    After a sharp decline in March and April, Chinese onshore bond yields have bounced back over the past three weeks. But based on the latest economic data and policy signals, Chen Long thinks that bond yields have further to fall. Growth is continuing to slow, and the central bank seems comfortable with a slightly more accommodative stance.

    0
  • Gavekal Dragonomics

    What’s Really At Stake In The US-China Rivalry

    It is still possible that the US and China will strike a deal to avert threatened tariffs. But as Arthur argues in this piece, any deal will be mostly cosmetic. The tension between the two is not mainly about trade, but about China’s challenge to US global dominance. The US will almost certainly keep trying to counter China’s efforts to gain power.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Next On The US-China Telenovela: Investment Curbs

    An unusually large group of senior American officials has landed in Beijing for two days of talks on the trade and technology dispute embroiling the US and China. There is no reason to think the mission will achieve much. And if it does manage to cobble together a temporary deal to forestall the tariffs the two countries have threatened against one another, it will do nothing to delay the next act in the drama: proposed restrictions on Chinese...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Seizing The Moment For Artificial Intelligence

    As the US and China try to position themselves for technological leadership, both are now focusing on artificial intelligence. In this piece, Andrew answers the questions of the moment: What is artificial intelligence anyway? Why does China seem to be doing so well in artificial intelligence? And how should we think about this US-China rivalry?

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Strategy Monthly: Living With US-China Strategic Rivalry

    A gaggle of US cabinet officials are in Beijing this week for talks aimed at lowering the temperature on US-China trade relations. While there may be an agreement to temporarily delay the huge tariffs each side has threatened to impose on the other, there is no chance of bridging the real rift between the two countries, which arises from China's technological and geopolitical ambitions. A trio of aggressive strategies launched by Xi Jinping...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Punishing People, Not Institutions

    The strategy behind China’s financial overhaul is becoming clear. It is helping banks by allowing an extended transition to a new set of rules. But prosecutions of executives are also ramping up. This is the opposite of what some Western countries did after the 2008 crisis: people, not institutions, are paying the price for financial risk-taking.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Upcoming Monetary War, With Gold As An Arbiter

    When President Trump was recently asked if he was starting a war in traded goods with China, he countered that the US had lost that struggle 20 years ago. As the US retains a comparative advantage in technology, such arguments have led some to conclude that the world’s two biggest economies will fight their next economic battle in this new theater. That may be true, but for me the real fight will be less about trade than a struggle for dominance...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Still Bond Bears

    Matching its 2013 peak, the world’s most-watched interest rate—the US 10-year treasury yield—yesterday touched 3%. Concerns are now high that it will soon move higher, perhaps much higher. For perspective, the US 10-year hit 3.75% in 2011, 4% in 2010 and 5% in 2007. In this cycle, we think yields will break above 3% and then march upwards. In short, we remain bond bears and continue to recommend keeping duration short. Today, we want to...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Dangerous Dealing Along The Belt And Road

    In countries involved with China’s Belt-and-Road Initiative, there is a growing realization of the risks to signing up for the scheme. As debt has mounted and fears of economic dependence have increased, a backlash has begun. But as Tom explains, the lure of easy Chinese capital is a dangerous habit that many countries will struggle to kick.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Emerging Markets And Energy

    We all know, don’t we, what defining characteristics the emerging markets have in common? Of course we do. Emerging markets are developing countries on course to become advanced economies, typically with the assistance of powerful demographic tailwinds. But although they enjoy rapid growth over the long term, their institutional architecture is still under construction. As a result, emerging equity markets are more volatile than those of the...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    New Jobless Rate, Same Old Problems

    China has moved to rid itself of a longstanding statistical embarrassment, replacing its discredited unemployment data with a new survey based on international standards. But as Ernan explains, the old problems have not gone away: the new jobless rate is still implausibly low and stable, and likely still subject to political manipulation.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Keeping Credit Growth On Track

    China’s central bank has tweaked monetary policy to soften the slowdown in credit growth. The RRR cut continues its strategy of managing liquidity to limit the economic impact of the campaign against financial risk. Other data for March still point to a moderate growth slowdown in 2018, particularly given the continued strength in property.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Audio & Transcript — Gavekal Research Call April 2018

    During yesterday’s monthly call, Arthur Kroeber addressed rising geoeconomic and geopolitical tensions between the world’s two biggest economies. He argued that US moves against China ran far deeper than trade tariffs as actors across the political spectrum in Washington were intent on changing China’s basic economic model, something that Beijing will likely fiercely resist. Much of his focus was on the tech sector, which is front-and-center of...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    A First Step Towards Easing

    The Chinese central bank is no longer in full policy tightening mode. That’s good news for Chinese bank shares. Shortly after government statisticians released economic data for the first quarter on Tuesday, the People’s Bank Of China announced a 100bp reduction in bank reserve requirement ratios. For big banks, this reduces the proportion of their deposits they are required to lodge as reserves at the central bank from 17% to 16%. In gross...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Hong Kong Seminar — April 2018

    At Gavekal’s seminar in Hong Kong this week, Arthur Kroeber, Rosealea Yao and Nick Andrews presented their latest views on the brewing trade war between the US and China, Chinese growth and the property market outlook, and how to capture European growth.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Changing Language On Leverage

    China’s policymakers have for the first time called for reducing the total debt-to-GDP ratio. This shift has raised worries that monetary policy could get tougher, on top of the tightening of financial regulation that is already underway. In this piece, Long explains that no shift in policy is imminent; if anything, easing is getting more likely.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    What Inflation Means For Margins

    As China’s producer price inflation cools and its consumer price inflation picks up, one might expect corporate margins to be fattening, as cost pressures wane and pricing power strengthens. In fact, the opposite is true: margins have been fat, and are now getting tighter. In this piece, Thomas explains how inflation really affects margins.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    After Constructive Engagement

    Separating signal from noise in the ongoing US-China trade dispute continues to be a thankless task. Trade war fears rose late last week thanks to an offhand threat from President Donald Trump to impose tariffs on another US$100bn of imports from China. They ebbed early this week when Trump reversed course and said a deal was likely soon, and Chinese president Xi Jinping delivered a speech promising a reduction in automobile tariffs and market...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Reasons To Buy The Dip

    After spending many years as Gavekal’s equity permabull, I joined Charles and Louis last December in warning of the risks to what was then a roaring, and accelerating, bull market. But my way of thinking about these risks was rooted in a different analytical framework, and so I have come to a different conclusion about how investors should respond to this latest sell-off (for Louis’ take, see Following Yesterday’s Pullback). With the lows of mid...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Video: Making Sense Of China's New Era

    In this lively presentation from our recent London seminar, Tom Miller outlines the dramatic political changes that have been taking place in China. He explains what Xi Jinping’s new status means for economic policy and governance, and how the links between the Communist Party and the state are being strengthened.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    How Steel Survived The Battle For Blue Skies

    It’s been a wild winter for China’s steel industry, with huge swings in output and prices. The main culprit is the aggressive official campaign to reduce air pollution—and the industry’s creative responses to it. Their back-and-forth has not hurt underlying growth much, but the resulting volatility in steel prices is not going away.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Ready For A Further P/E Derating

    I see but through a glass darkly. Sometimes, however there are glimmers of light. Four months ago, in early December, I examined the signals being broadcast by the various investment rules I have long followed and concluded that: “While global markets have been stable for the past 18 months, we may soon be entering a period of greater instability.”

    6
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Following Yesterday’s Pullback

    Two weeks ago I looked back at Enron’s collapse in 2001 and asked whether a crash-and-burn at Tesla or Uber would be this cycle’s catalyst for a fundamental re-assessment of business models. But perhaps my sights were set too low, as this roll-over was triggered not by a cash-burning profligate flaming out, but by turmoil engulfing the Facebook gorilla, and by extension the likes of Google and Snap, which rely on “the user being the product”.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Can EMs Survive A Trade War And Keep Thriving?

    A US-China trade war would disrupt trade, likely drive up inflation and potentially spark a general risk-off move in markets. This scenario would be pretty terrible for emerging markets, but Joyce reckons it is a tail risk and the general outlook remains decent. In this chartbook, she reviews EMs' vulnerability to a trade bust and explains why profits should drive a maturing cycle that increasingly favors commodity-focused markets outside...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Macro Update: Centralization Amid Conflict

    In our latest chartbook, Chen Long outlines a relatively positive cyclical economic picture for China, with steady macro policy, strengthening financial regulation, and further political centralization. The risks to this outlook are tightening property policies, a local government funding squeeze and the looming threat of a US-China trade conflict.

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    On Protectionism

    As the US toughens up its negotiating stance on trade, it seems that ghosts from the Great Depression haunt the land. The men of Davos can be heard to intone gravely that President Donald Trump is aping Herbert Hoover, and as in the 1930s, the global economy may go into a tailspin. I am struck that our cherished elites have discovered a form of government intervention that they do not like, especially given their support for so many other “...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Pain Of Power Producers

    The rebound in commodity prices since 2016 has been a boon for much of China’s industrial sector—but coal-burning power plants have been big losers. Coal prices cannot go much higher without causing serious financial distress. This means that policy should now be shifting to favor power producers, by ensuring coal prices do not climb further.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Trade Wars: A China Expert Roundtable

    Last week’s sharp equity market sell-off followed the US effectively threatening China with a trade war. In this report, Arthur, Long and Andrew address China’s capacity to strike back and explore what it means for the relationship between the world’s two biggest economies.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Trade Wars: Advantage China

    In the US-China trade war, China is skillfully playing Go while the US is playing tic-tac-toe, badly. Arthur analyses the announcement of US$60bn worth of tariffs by the US on Chinese imports and finds the US flailing without a firm strategy. But behind the news, a dangerous consensus has emerged among America’s elites which holds that China’s rise comes at the US’s expense, and must be checked.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    London Seminar — March 2018

    In our seminar in London this week Charles pondered the investment consequences of the US moving back into an inflationary period. Tom discussed Chinese politics in light of Xi Jinping’s elevation. Cedric presented on how investors can best benefit from the diversity of the European economy. Anatole explained why the long-running global bull market is likely to continue, but also where the risks are buried.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Beyond Anti-Corruption

    China’s legislature has approved the creation of a national “supervision” system, an arm of government equal to the executive, legislative and judicial branches that is charged with overseeing the vast public sector. As Yanmei explains, the new system transforms Xi Jinping’s signature anti-corruption crusade into something even more ambitious.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The New Economic Team

    China’s top economic team for the next five years was released this morning, and the theme seems to be “steady as she goes”, with a vote of confidence for experts in their fields. Chen Long has looked at the list, which includes a new PBOC governor, and offers his take on what this means for financial policy in the years ahead.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Video: Fixing The Model

    Earlier this week Will issued a mea culpa report that explained why he was revising his Wicksellian asset allocation model and substantially changing his recommendations for the US market. In this video interview he explains the story behind this revision.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Cold Weather, Hot Data

    China’s first data release of 2018 delivered a couple of surprises, with a big jump in industrial value-added and a pickup in real-estate investment. But neither amounts to a convincing signal that the economy is actually re-accelerating. The most likely outcome is still a moderate growth slowdown driven by a shallow downcycle in property.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    A New Organization Chart

    China yesterday unveiled a sweeping plan to reorganize its central government. In this piece, Yanmei explains how Xi is streamlining administration and empowering new agencies to carry out his distinctive domestic-policy priorities of environmental protection, risk control, and poverty alleviation, as well as his assertive foreign policy.

    6
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Curious Case Of The HK Dollar

    One of the longest awaited adjustments in financial markets may finally be about to happen. Last year, betting that Hong Kong dollar interest rates would rise to converge with US dollar rates was reckoned to be among the surest trades in world markets. Yet the convergence never happened. Over the last 12 months, one-month Hong Kong dollar Hibor has consistently traded at a discount to one-month US dollar Libor of more than 30bp. And since the...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Audio & Transcript — Gavekal Research Call March 2018

    In last week’s Research Conference Call Cedric Gemehl and Nick Andrews presented a thematic approach for playing the European growth story. Cedric explained why the major stock indexes fail to capture the geographical and sectoral potential in Europe, and Nick proposed specific investment themes that should allow investors to benefit from Europe’s continued expansion.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Trade Wars: The Phantom Menace?

    In the aftermath of the past week’s to-ing and fro-ing over steel and aluminum tariffs, there is one thing we can be certain of this year: we are going to see a lot more protectionist theatrics coming out of the White House. What is much less certain is how worried we should be.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Property Tax Is Back

    A property tax is back on the Chinese government’s agenda: after being postponed in 2017, the long-discussed tax was brought up again at this week’s legislative session. The draft law could come in 2018, with actual taxes being levied by late 2019 at the earliest. But Rosealea expects this to be largely a non-event for the property market.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The New Challenger In Memory Chips

    China is making an expensive new push to crack the market for memory chips, now dominated by a South Korean-led oligopoly. In this piece, the first in an occasional series looking at China’s technological ambitions and the Made in China 2025 plan, Dan assesses whether and how China can succeed in this drive to gain semiconductor market share.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Meaning Of ‘High-Quality’ Growth

    According to Xi Jinping, China’s high-speed growth is over, and it is pursuing “high-quality” growth instead. With today’s publication of official targets for 2018, the real impact of that rhetorical change is getting clearer. In practice, the focus on “quality” will not end pressure to deliver economic growth, nor reduce government intervention.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Video: Surviving China's Regulatory Storm

    Scarcely a week goes by without word of some new regulatory crackdown on China’s financial services industry. After years of financial liberalization, runaway growth in the shadow banking market, and rampant regulatory arbitrage, the authorities are now moving to unify a fragmented regulatory regime and contain the risks posed by excessive leverage and complexity. In this video interview, Chen Long makes sense of the about-face and explains what...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The First Casualty In Trump’s Trade War

    Donald Trump has finally delivered on his long-delayed promise of trade protectionism, and in the worst possible way. By promising to impose tariffs on metals imports (25% on steel, 10% on aluminum) on “national security” grounds, he addresses a problem that doesn’t exist, and creates a host of new ones. All this assumes, of course, that the tariffs are not watered down or more narrowly targeted when they are formally announced next week—a real...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    How Much Risk Of A US-China Economic Cold War?

    Donald Trump’s announcement of tariffs on US imports of steel and aluminum looks like the first salvo in a new trade war. But while Thursday’s measures will mostly affect America’s closest allies, behind the scenes the US administration appears to be preparing a more focused campaign directed against China. In this analysis, Arthur examines the political maneuvering over trade within the Trump team, explains why the hardliners are now in the...

    6
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Is Construction Preparing An Upside Surprise?

    Since markets reopened after the Chinese New Year holiday, the prices of commodities tied to China’s construction cycle have been picking up. This optimism could be justified: construction fundamentals are solid and policy interventions are mostly positive. In this piece, Rosealea explains the upside risks for construction activity in early 2018.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The New Challenge Confronting Investors

    Few in the markets will be sorry to see the back of February. But as a tough month draws to a close, this seems a reasonable time to take stock and draw lessons for the future. It is perturbing that lesson Number One must be that there really was nowhere to hide. Geographical diversification served little purpose, as all markets fell and then rebounded in unison. The same held with sectors, for those that performed worst in 2017 (energy and...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Emperor Xi Is Not So Far Away

    By removing term limits from his office of president, Xi Jinping has shown there are no constraints left on his political power. As he strengthens his grasp on the top of China’s political pyramid, he is also enforcing his will more effectively at the bottom. For better or for worse, he is moving China to a more centralized and top-down system.

    8
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Taming The Inflation Risk From Pork

    What are the odds that China has a surprise jump in inflation this year? In China, surges in the CPI are usually driven by food—particularly highly cyclical pork prices. But while food inflation is likely to turn positive this year, Ernan argues that the odds of an inflation spike are low, as farm consolidation has tamed the pork price cycle.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    Local Infrastructure Feels The Chill

    China’s financial crackdown is now extending to the funding tricks that local governments use to pay for infrastructure projects, which have long been tolerated in the name of economic growth. This report explains why this crackdown will put more of a chill on infrastructure spending—but also why public-works investment is unlikely to collapse.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Audio & Transcript — Gavekal Research Call February 2018

    In last week’s Research Conference Call Andrew Batson outlined the risks—both downside and upside—to the Chinese economy in 2018. Yanmei Xie focused on the risk of overzealous implementation of policy. This is especially the case for environmental regulations, which gave Beijing an uncharacteristically smog-free winter, but at the cost of a natural gas shortage.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    EMs And The Global Cycle

    The market correction of the last two weeks has been centered on the US, but also hit emerging markets pretty hard. A year ago, I argued that the sustainability of the EM run-up depended on continued strong global growth, more oil price gains and a further fall in tail risks associated with the financial system. The issue is whether the newly volatile conditions in global markets are a game-changer for the emerging world. That conundrum depends...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Video: Freeze-Thaw Conditions In Korea

    It has been a week of confusing signals from the Korean peninsula. Even as North Korea has paraded its missiles, and the US and its allies have sworn to exert “maximum pressure” against Kim Jong-Un’s rogue regime, both sides have hinted at their readiness to return to the negotiating table. Yanmei cuts through the fog to assess the future trajectory of North Korean event risk.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Chinese Equities: Marching To A Different Drum

    Though onshore Chinese stocks did not escape the rout of global markets in recent weeks, the real trigger for the meltdown onshore was heightened investor anxiety over Beijing’s financial regulations. Thomas and Ernan reckon that after the dust settles, benign fundamentals and attractive valuations should set the market back on its upward track.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Behind The Market’s Inability To Rally

    “A week is a long time in politics”, Harold Wilson was said to have once quipped to a young aide. The former British prime minister should have tried working in the US equity market. In recent days, it has sometimes felt as if time stood still. So what should we make of stocks’ inability to mount a rally after they again closed on their lows?

    0
Show me: results