Gavekal Dragonomics
September 23, 2021
China’s regulatory onslaught against companies like Ant Group, Didi Chuxing and Tencent has been widely referred to as a “tech crackdown.” In this piece, Dan argues that the government’s actions are less a sign that it has turned against tech than they are a rejection of the idea that the consumer internet is the peak of technological achievement.
Gavekal Dragonomics
September 23, 2021
Markets have reacted violently to China Evergrande Group starting to default on US$300bn of obligations. The worry is that a disorderly failure causes a systemic crisis that dents Chinese growth and upends other emerging markets. Our team of analysts think such a chaotic denouement is unlikely and a managed solution remains the most likely outcome. In this webinar, they explain their thinking.
Gavekal Dragonomics
September 22, 2021
Over the past two months, iron ore prices have tumbled as China’s property market slows and local authorities expand restrictions on steel output. In this report, Rosealea explains why falling steel demand should cause prices to continue their decline, eventually settling at around levels of US$70-80/ton.
Gavekal Dragonomics
September 15, 2021
China’s dismal August economic figures suggest that the “window of opportunity” identified by the Politburo in April, when officials hoped to take advantage of China’s post-Covid rebound to focus on longer-term structural priorities, is now closing. However, it is still too early to expect policymakers to shift gears into a supportive stance.
Gavekal Dragonomics
September 8, 2021
It’s been clear for a couple of months now that China has begun a monetary easing cycle. What has been less clear is what kind of easing cycle will happen under the central bank’s new “cross-cyclical” policy framework. The PBOC’s guidance indicates it could start cutting rates this year, but will try to keep credit growth next year roughly flat.
Gavekal Dragonomics
August 12, 2021
With China’s government sounding more worried about growth, hopes are rising that infrastructure spending will get a boost in coming months. In this piece, Wei explains why new funding for projects will be slow to arrive. More of a boost will come by early 2022, but the upside will still be modest by historical standards.
Gavekal Dragonomics
September 2, 2021
China’s central bank has now endorsed the creation of a domestic high-yield bond market in an attempt to reverse the increasing exclusion of private-sector borrowers from existing debt markets. In this piece, Xiaoxi outlines how financial regulators are trying to increase both the supply of and demand for high-yield corporate bonds.
Gavekal Dragonomics
August 31, 2021
The renminbi has been strong in 2021, with the central bank largely tolerating a steady march higher in the trade-weighted CFETS index. But this trend will turn in coming months, as inflows of foreign currency on both the current and capital accounts decline. With the PBOC easing as the Fed prepares to taper, the renminbi will weaken modestly.
Gavekal Dragonomics
August 19, 2021
Huarong Asset Management announced in a press conference on Wednesday that it had reached a recapitalization agreement with government-backed investors. In this Quick Take, Wei and Xiaoxi explore the consequences for Huarong investors and the government’s wider battle against the implicit guarantee.
Gavekal Dragonomics
September 16, 2021
Online payments were one of the first and most prominent victims of China’s regulatory onslaught against internet platforms. In this piece, Xiaoxi explains how a combination of both tighter oversight and the pending launch of the digital renminbi is limiting platforms’ ability to monetize their payments businesses.
Gavekal Dragonomics
August 26, 2021
What is driving China’s regulatory crackdown on internet and other companies, and what will happen next? In this piece, Ernan explains how four overlapping political campaigns by top leader Xi Jinping are behind the upheaval of recent months, and how those campaigns will guide the government’s enforcement priorities in coming years.
Gavekal Dragonomics
August 4, 2021
Digital gaming stocks tumbled yesterday after an editorial published in state media criticized the social consequences of video games. In this Quick Take, Ernan explains how regulators are tackling the perceived social ills of China’s youth, and why the dramatic market reaction underscores how sensitive investors have become to official guidance.
Gavekal Dragonomics
August 24, 2021
The steady drumbeat of tightening on China’s property developers is taking its toll on construction activity. In this report, Rosealea explains why this weakness in construction will not unduly worry policymakers and should even help them achieve their goal of reducing steel production. Developers will therefore continue to feel the squeeze.
Gavekal Dragonomics
August 5, 2021
Steel futures are on the rise again after several provinces announced plans to cut production. This might sound familiar: prices spiked in April and May following similar announcements. Rosealea writes that this time is different, as slowing construction activity in 2H21 should lower steel demand, making production easier to control.
Gavekal Research
July 28, 2021
Investor confidence in Evergrande Group, China’s second-largest property developer, has been pummeled in recent weeks. While Evergrande has managed to put out the latest round of fires, and a collapse is unlikely, Rosealea argues in this piece that market volatility for developers will probably continue as financial regulators keep on squeezing.
Gavekal Research
September 13, 2021
China’s offshore internet platform stocks saw fresh falls in Asia on Monday morning after reports that the Chinese authorities will break up Ant Group’s Alipay business. In recent weeks, some investors have been advocating a rotation to “safer” segments of China’s tech sector, such as hardware companies favored by policymakers.
Gavekal Dragonomics
August 3, 2021
The pace of financial decoupling between the US and China has quickened, with regulators in both countries tightening requirements for Chinese firms seeking to list in US markets. With the SEC likely to push ahead with the delisting of Chinese firms, Thomas writes that Chinese companies will rely on Hong Kong to access global capital.
Gavekal Research
July 29, 2021
Investors in China’s offshore-listed stocks have suffered multiple regulatory shocks. But with both onshore and Hong Kong equities now suffering, the crackdown is hitting domestic investors. Thomas explains why this will likely change the calculus for China’s policymakers, and why regulators are now likely to adopt a more constructive tone.
Gavekal Dragonomics
August 11, 2021
The rapid spread of the Delta variant across China is posing the biggest challenge yet to the government’s zero-tolerance policy toward Covid-19. In this report, Ernan explains why officials are confident in the policy and will likely keep it in place for the indefinite future—at the cost of depressed travel and consumer services.
Gavekal Dragonomics
June 24, 2021
One of the most dramatic shifts within the global consumer market since Covid-19 has been the sudden termination of Chinese overseas tourism. In this report, Ernan explains why Chinese tourists will likely decide to remain grounded even as other countries open their doors, leaving households with extra money to deploy at home.
Gavekal Dragonomics
May 25, 2021
China’s Covid-19 vaccination program has significantly accelerated in May, bringing it on track to reach its target of administering at least one dose to 40% of the population by end-June. In this report, Ernan explains why this achievement does not mean the country will be opening its borders or removing domestic precautions this year.
Gavekal Research
June 17, 2021
US policy on China is now defined by an acute tension between national security and business interests. In this report, Arthur and Dan explain how the Biden administration is navigating this tension, one which will be a permanent feature of the global landscape over the next decade.
Gavekal Dragonomics
June 3, 2021
The US government’s criticism of China’s treatment of the Uyghur minority in Xinjiang, and China’s government’s tough response, is a very public test case for multinationals with China operations. They don’t want to take sides. But as Dan explains in this piece, foreign companies will, if forced to choose, move closer to the US position.
Gavekal Dragonomics
April 7, 2021
With the hardening of the US-China strategic rivalry and technology’s central role in that rivalry, the possibility of a war over Taiwan is one which must be considered. In this report, Arthur explains the importance of the island to both countries and concludes that while the risk of war remains low, it is likely to rise in the next several years.
Gavekal Dragonomics
September 23, 2021
Markets have reacted violently to China Evergrande Group starting to default on US$300bn of obligations. The worry is that a disorderly failure causes a systemic crisis that dents Chinese growth and upends other emerging markets.
Gavekal Dragonomics
September 10, 2021
Even by China’s high standards, 2021 has seen an extraordinary amount of government intervention in the economy, as top leader Xi Jinping moves aggressively to implement his vision of national greatness. In this webinar our China team assess the impact on the economy and markets, and discuss what could cause this crackdown to pause or reverse.
Gavekal Research
July 23, 2021
The reflation trade has ebbed in recent weeks as investors have gotten more comfortable with the trajectory of US monetary policy and concerns have risen over the Delta variant of Covid disrupting economic opening. At the same time, China continues to crack down on its high-growth internet sector.
Gavekal Dragonomics
September 9, 2021
Even by China’s high standards, 2021 has seen an extraordinary level of active government intervention in the economy. With foreign investors spooked and growth slowing, how much longer can it go on? In this chartbook, Andrew takes stock of the many aspects of the current policy activism and assesses the prospects for a course correction.
Gavekal Dragonomics
July 23, 2021
China's post-Covid boom peaked in H1 and the beginnings of a slowdown are now obvious. Although growth momentum is still quite solid, policymakers have moved pre-emptively to start a monetary easing cycle. In the latest edition of our regular chartbook, the Dragonomics team explains the outlook for the economy and markets.
Gavekal Dragonomics
May 27, 2021
China’s companies are enjoying a historic boom as domestic and global demand bounces back from the shock of Covid-19. But how long will it last, and what will the longer-term effects be? In this annual chartbook, Thomas lays out the fundamentals of China’s corporate sector through a detailed examination of income statements and balance sheets.
Gavekal Dragonomics
June 30, 2021
The expansion and opening of China’s onshore renminbi bond market is one of the biggest changes to the structure of global financial markets in recent years, one that investors are still grappling with. In this comprehensive 30-page DeepChina report, our analysts present a guide to the nature and functioning of this important market.
Gavekal Dragonomics
April 20, 2021
China is using the best-funded industrial policy in history to engineer greater self-reliance in semiconductors. Ambition and a big checkbook, however, do not guarantee success. In this DeepChina report, Dan argues that Chinese chip firms will increase their market share in some segments, but will not make it to the technological frontier.
Gavekal Dragonomics
Rogier Creemers
December 10, 2020
China’s social credit system is widely misunderstood as a totalitarian tool. The reality is that it is a relatively low-tech part of a sophisticated Communist Party strategy to use digital means to deliver both better governance and social control. In this 22-page DeepChina report, Rogier Creemers explains the truth behind the social credit myths.