PBoC to take CNHKRW Higher

This post is taken from our August 7th weekly report. USDCNH breached the 6.90 mark last week, having been under 6.30 just four months ago. This 10% depreciation has come against a backdrop of slowing Chinese growth and escalating US trade tensions. Although there...

China Losing its Edge on Exports

The meteoric rise in Chinese exports now appears to be losing steam with world export market share falling by 1%-point over the last two years and potentially mirroring Japan’s long-term retrenchment. While the sluggish pace of world trade growth since 2008 has...

If China loses, who wins?

With China taking the brunt of the escalating trade war, we have identified several economies that could benefit from China’s loss (assuming that President Trump continues to focus on China and does not pursue blanket tariffs on all exporting nations). To gauge this,...

China Broad Credit Growth Slows to Zero

The recent tightening of credit we have seen in China is primarily aimed at clamping down on shadow financing. Wealth management products have rapidly grown in size, from only 8% of total banking deposits in 2012 to over 20% today. The top chart shows China’s banks’...

Capital Leak from China Stemmed for Now

China’s FX reserves stabilized for the third month running, in a sign that China has made some serious headway in tightening capital controls. The top chart shows that PBoC selling of FX reserves has not been significant since January this year. The bottom-left chart...

Chinese Excess Liquidity Rolling Over

Chinese excess liquidity does a good job of leading asset prices as well as China-related commodities. We define excess liquidity as M1 money growth minus Inflation minus economic growth. This captures how much excess money there is beyond what the real economy can...

Short AUDCAD As Proxy China Trade

Although both AUD and CAD are commodity currencies, given Australia’s outsized exposure to China, AUDCAD can be used as a proxy trade on the Chinese economy. AUDCAD is approaching the top of its range just as Chinese liquidity is rolling over. In our March Leading...

Rising Inflation in China

PPI in China has swung from deflation to relatively high inflation over the last 6 months. Wholesale prices are rising fast, import prices are also rising due to the lagged effects from a weaker yuan are moving sharply higher. (CPI, especially core CPI, had been...