Gavekal Research

Louis Gave

Oct 27th 2020

A core thesis for Louis is that in financial markets three prices matter above all others: the price of oil, the price of US dollars and the yield on 10-year US treasuries. In this second part of a three-part series, he addresses the bond market question. US treasuries are currently pricing in a highly deflationary future on both a cyclical and structural basis. Such an outcome would defy recent experience in the US bond market.

Gavekal Dragonomics

Xiaoxi Zhang

Oct 22nd 2020

The pandemic economy has not been very good for China’s banks, with net profits plunging an unprecedented 24% YoY in Q2 as the government pressured them to sacrifice profits. In this piece, Xiaoxi explains why things are not actually so bad: bank profits have been hurt mainly by aggressive provisioning requirements, which are likely to ease in 2021.

Gavekal Research

Vincent Tsui, Udith Sikand

Oct 20th 2020

Last spring, key beneficiaries of the rich world’s fiscal and monetary largesse were emerging market economies, which enjoyed unprecedented policy flexibility that gave broad-based, if not universal, financial relief. The next turn in this crisis is, however, unlikely to float as many boats, as shown by divergent inflationary trends across EM economies.

Gavekal Research

Andrew Batson

Oct 16th 2020

The advance of the private sector and the retreat of the state sector has been central to China’s long transformation from an isolated socialist nation to a globally connected economy. Yet the notions of China’s private sector being either in the ascendency, or facing a squeeze in the statist Xi Jinping era are not born out by the facts. Andrew Batson discussed the findings in his recent major piece of research on this topic.

Gavekal Research

Louis Gave

Oct 14th 2020

In financial markets, there are three prices matter above all: the price of the US dollar, the yield on 10-year US treasuries, and the price of oil. Get the direction of these right, and the other pieces of the investment puzzle fall into place. In the first of a three-part series, Louis examines in depth what could cause the oil price to break out of its current trading range.

Gavekal Research

Charles Gave

Oct 13th 2020

In half a century of doing financial analysis, Charles has acquired the core conviction that there is not one type of bear market, but two. Think of these as the gentle black bear-type downturn that is survivable and the highly-dangerous, big brown grizzly collapse that for many money managers proves fatal. In this piece, Charles seeks to map this insight with some analytical rigor.

Gavekal Dragonomics

Ernan Cui

Oct 12th 2020

Tourism over China's weeklong National Day holiday disappointed, with tourism revenues down 30% YoY. In this Quick Take, Ernan writes that Chinese consumers still seem concerned about long-distance travel, and are instead spending their money locally; however, the overall recovery in consumer spending is still continuing apace.

Gavekal Dragonomics

Rosealea Yao

Oct 08th 2020

In late July, Beijing declared that a trial “long-term mechanism” for regulating real estate had achieved “significant results” despite having never been properly defined. Rosealea posits that the mechanism is a combination of smaller reforms implemented in recent years, concluding that major policy changes are therefore unlikely for now.

Gavekal Dragonomics

Andrew Batson

Oct 01st 2020

The retreat of the state from the command of China’s economy has been greatly exaggerated. In this 25-page DeepChina report, Andrew uses new estimates of SOEs’ share of GDP to show how little has changed in the state’s role in the economy in the past two decades, and explains how that stability has affected China and the rest of the world.