Gavekal Dragonomics

Arthur Kroeber, Long Chen

May 07th 2014

The fall in the renminbi over the last two months has prompted much anxiety. For the past nine years one of the few certainties of global markets was that the Chinese currency would end the year stronger (or at least no weaker) than it began. That certainty has been demolished—which indeed was the goal of the People’s Bank of China (PBOC) when it engineered the depreciation. There are now two questions to consider. First, how much further might...

Gavekal Research

Arthur Kroeber, Will Denyer, Joyce Poon, Tan Kai Xian, Nick Andrews, Long Chen

Apr 30th 2014

In the latest bi-weekly review of global economics and investment, Arthur Kroeber considers the implications of Asian deflation. Will Denyer & Tan Kai Xian consider the strong rental market for US homes and wonder what this means for the broader housing sector. Nick Andrews looks up close at reduced liquidity in the eurozone’s financial system. Chen Long looks at a favorable convergence between national GDP numbers and the growth claims made...

Gavekal Dragonomics

Rosealea Yao

Apr 29th 2014

The supply side of China’s property market is looking surprisingly weak. Indicators of property developers’ desire to expand future housing supply are turning down: construction starts have fallen outright by more than 20% YoY for each of the first three months of 2014, and land purchases swung to a sharp 17% decline in March from slow growth in earlier months. This deterioration in the supply side looks out of proportion to the more gentle...

Gavekal Dragonomics

Long Chen

Apr 28th 2014

Even though the renminbi fell steeply in the first quarter, sliding 2.7% against the US dollar, capital continued to flow heavily into China. Balance of payments data published last Friday show China’s current account surplus for the period was just US$7.3bn. The capital account, however, notched up a surplus of US$118.3bn.

Fathom China

Matthew Forney, Research Team

Apr 24th 2014

The way that billions of people pay for things is in flux across the world. No sooner had consumers grown accustomed to using bank cards instead of cash than the next big thing, online payments, swept onto the scene. In China, a giant state-owned firm called China UnionPay (“UnionPay”) has long straddled most payment channels as the only authorized bank card network. UnionPay is a government-controlled cousin to Visa or MasterCard, with its logo...

Gavekal Research

Long Chen

Apr 22nd 2014

In China, the whole is not necessarily greater than the sum of its parts; in fact it can be less. China’s provincial GDP figures are viewed skeptically because of two obvious problems: the sum of provincial GDP is often much higher than national GDP, and most provinces report GDP growth faster than the national average. In what could be a sign of higher-quality data at the local level, both of these trends are now changing: the gap between the...

Gavekal Research

Arthur Kroeber

Apr 22nd 2014

The latest news from Asia’s biggest economies is uninspiring. China’s growth grinds lower, and the renminbi has declined by 3% against the US dollar since January. Japan is suffering the anticipated effects of this month’s consumption tax hike, and Anatole has predicted that the BoJ will respond later this year with a fresh round of money-printing which could push USD/JPY well above its established level of 102 to the dollar.

Gavekal Research

Andrew Batson

Apr 16th 2014

By reporting the relatively low figure of a 7.4% rise in first-quarter gross domestic product, down from 7.7% in the previous quarter, China has confirmed that the current pace of economic expansion is now roughly as weak as it was during previous downturns in 2008 and 2012. While the headline number was better than market expectations, and growth clearly picked up a little in March from the lows of January and February, there are worrying signs...

Gavekal Dragonomics

Fraser Howie

Apr 14th 2014

For more than 20 years, China has been experimenting with ways of bringing in capital from equity investors overseas. What has characterized all of its various programs, with their bewildering array of names—red chips, B shares, QFII—was extremely tight central-government control over who could participate and how large the fund flows could get. But the tie-up announced last week between the Hong Kong and Shanghai stock exchanges shows that a...