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Gavekal Research
Rosealea Yao
Jul 28th 2021
The Evergrande Drama Plays Out
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.
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Gavekal Dragonomics
Dragonomics Team
Jul 15th 2021
A Manageable Decline
Chinese economic data for June showed cyclical sectors beginning to decline from a strong peak, while consumption growth is still struggling to regain pre-Covid levels. In this Quick Take, the Dragonomics team explains why China seems on track for a manageable decline in H2.
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Gavekal Dragonomics
Rosealea Yao
Jul 06th 2021
Another Go At The Property Tax
After two years of silence, the Chinese government has signaled it is making a new effort to implement a residential property tax by expanding local trials. In this report, Rosealea explains why, against a better economic backdrop and with less organized opposition, the property tax is likely to stick this time around.
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Gavekal Dragonomics
Rosealea Yao
Jun 07th 2021
The Urbanization Surprise
China’s 2020 census revealed that urbanization has been faster over the past decade than official statistics showed. That means the fundamentals for housing demand are stronger than most had realized. As Rosealea argues in this piece, the census should drive an upward reassessment of long-term trends in China’s urbanization and commodity demand.
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Gavekal Dragonomics
Ernan Cui
May 12th 2021
The Population Turning Point Gets Closer
China’s 2020 census has confirmed that the country’s population could peak around 2025, rather than the consensus forecast of around 2030. Ernan writes that inconsistencies in the data suggest the census figures are overstated; indeed, China’s population may already have peaked in the last year, a decade ahead of schedule.
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Gavekal Dragonomics
Dragonomics Team
Apr 16th 2021
The Two-Speed Recovery Continues
Chinese GDP growth lost momentum in 1Q21 according to economic data released on Friday, with broad strength in the industrial sector offset by weakness in household consumption, particularly within services. In this Quick Take, the Dragonomics team dive into China’s Q1 economic figures and explain why they paint a picture of stability.
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Gavekal Dragonomics
Xiaoxi Zhang, Rosealea Yao
Apr 12th 2021
Curbing Mortgage Enthusiasm
China’s regulators are strengthening their curbs on the property market as its post-pandemic exuberance continues. In this piece, Xiaoxi and Rosealea explain the central bank’s latest moves to curb disguised mortgage lending and cap overall loan growth. The main effect of these controls will be to slow lending to households and cool housing prices.
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Gavekal Dragonomics
Ernan Cui
Mar 18th 2021
The New Plan For Urbanization
The 14th five-year plan outlines significant changes to China’s household registration (hukou) system. In this report, Ernan writes that this new policy direction is to reduce the significance of the system over time by reducing urban/rural inequality. Rural areas will benefit, but at a cost to China’s overall economic growth.
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Gavekal Dragonomics
Andrew Batson
Feb 23rd 2021
To Hold Back The Tide Of De-Industrialization
China’s government is focusing on a new economic metric: the manufacturing share of GDP, which looks to feature in the next five-year plan. Rather than accept de-industrialization, it wants “stability” in manufacturing. In this piece, Andrew explains why China is worried about the fall in the manufacturing share, and whether it can be stopped.
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Gavekal Dragonomics
Rosealea Yao
Feb 10th 2021
Propping Up Property Sales
Housing sales growth is holding up well despite financial tightening and hawkish policymaker rhetoric. In this report, Rosealea explains why regulators are pressuring developers to cut prices, while increased household savings means more families can take advantage of these discounts. 2021 will therefore likely be a strong year for housing sales.
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Gavekal Research
Anatole Kaletsky
Jan 22nd 2021
Risks In The Biden Era
In December, Anatole outlined 10 disparate risks that could derail the bull market in 2021. That was before the Democrats won full control of the US government, paving the way for approval of Joe Biden’s new super-size stimulus package. In light of the developments over the last month, Anatole reassesses his 10 risks.
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Gavekal Dragonomics
Dragonomics Team
Jan 18th 2021
A Two-Speed Recovery
China’s Q4 GDP growth surpassed pre-Covid rates, with housing and manufacturing leading while services lagged and infrastructure investment slowed. In early 2021, this divergence is likely to continue as consumers stay home for the Chinese New Year and poor credit growth drags on infrastructure investment.
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Gavekal Dragonomics
Rosealea Yao
Jan 13th 2021
New Ceilings For Property Financing
China’s policymakers are expanding their restrictions on bank financing of the property sector, imposing limits on mortgage lending in addition to curbs on borrowing by developers. In this report, Rosealea explains why the new regulations do not shift her expectations of flat property sales and a modest decline in construction activity in 2021.
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Gavekal Research
Simon Pritchard
Jan 13th 2021
The Squeeze Of Old Hong Kong
Last Wednesday Hong Kong police arrested scores of pro-democracy activists for joining forces to try and win a local parliamentary election and thereafter block government legislation. The use of a tough new national security law to suppress routine political organization threatens more international opprobrium that will further cut the city off from the Anglosphere.
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Gavekal Research
Louis Gave
Jan 04th 2021
Gravity Or Liquidity? Which Will Win In 2021?
In hindsight, 2020 showed that if three conditions are met, a stock can break free from the earth’s gravity, and lift off for destinations only sci-fi writers could have imagined. Consequently, one of the most important questions for investors in 2021 is whether such inter-galactic travel can continue. Or will the coming year instead see a shift in investor behavior, with gravity once again exerting its downward pull?
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Gavekal Research
Anatole Kaletsky
Dec 22nd 2020
Goldilocks And The 10 Bears Of 2021
In recent years Anatole has written a series of articles describing 10 key risks for investors. He readily accepts that this year’s exercise was rendered redundant by the emergence of Covid-19 in January. Next year, however, he believes that a greater range of factors could weigh on markets and in this piece assesses them one by one.
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Gavekal Dragonomics
Rosealea Yao
Dec 18th 2020
A Looming Correction For Iron Ore
Iron ore prices hit an eight year high in early December in response to a tight steel market. Rosealea writes that this uptick in steel demand, likely due to China’s strong steel-intensive export figures, is unsustainable and should subside in the new year—resulting in a correction for iron ore prices in the coming months.
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Gavekal Dragonomics
Dragonomics Team
Dec 15th 2020
Credit Has Peaked, Growth Has Not
China’s economic momentum continued to accelerate in November despite an October peak in credit growth, with exports and manufacturing investment taking the lead while more policy-dependent sectors plateaued. In this piece, the Dragonomics team explains why China is likely to maintain its strong economic growth through 1Q21.
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Gavekal Dragonomics
Rosealea Yao
Dec 08th 2020
A New Reality For Commercial Property
Vacancy rates for office and retail space are picking up sharply this year despite a broad return to normality in China. In this report, Rosealea argues that Covid-19 accelerated an ongoing shift towards at-home work and entertainment. Developers must now grapple with the new reality that demand is unlikely to ever return to pre-Covid levels.
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Gavekal Dragonomics
Dragonomics Team
Nov 16th 2020
Full Steam Ahead
Economic data released on Monday showed China’s continued economic normalization, with property sales and infrastructure investment outperforming expectations, industrial activity staying strong and the consumer recovery picking up. In this Quick Take, the Dragonomics team outlines why this environment is favorable for bonds and risky for equities.
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