Revisiting Lessons from China 2015 Market Rescue

May 28, 2020 | China, US Equities

The collision of two powerful and opposing forces has created an uncertain outlook for equity markets. Aggressive stimulus from the Fed – which Powell says has “no limits” – has caused the monetary base to surge relative to the equity market cap (top-left...

Narrative Shift Depends on Virus

Mar 27, 2020 | US Equities

Earlier this month, the S&P and gold both collapsed on the same trading day, which is extremely rare. The top-left chart shows that in the past 20 years, the only times gold was down more than 3% while the S&P is down more than 5% was last week and back in...

Neutral on Industrial Commodities Despite Low Inventories

Jan 22, 2020 | China

There has been much commentary pointing out low inventories for industrial commodities and the potential for a squeeze higher in prices. Inventories are indeed very low (as shown in the top left chart using LME warehouse data) but this seems to have been a persistent...

Making the Best of the US-China Trade War

Jun 7, 2019 | China, US Economy

With the US-China trade dispute escalating further, we have returned to our previous analysis on export similarity to gauge the potential winners from a prolonged trade war. China’s exports are predominantly low-to-medium tech, which indicates a potentially high...

Fear and Risks of China Selling its USTs Overblown

May 29, 2019 | China

The spectre of China selling USTs has risen again as trade tensions between the US and China heighten. The basic assumption is that US rates will go sky-high and the USD would plummet. However, there are several reasons to think the net effect would not be so...

Buy the USDCNH Dip

Feb 1, 2019 | China

VP’s China leading indicator has shown few signs of rebounding and remains in negative territory, presenting a persistent headwind to the RMB. Historically a negative China LEI has led capital outflow by about 6 months and points to further outflow pressures (top-left...

PBoC to take CNHKRW Higher

Aug 28, 2018 | China

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

Aug 16, 2018 | China, Global Economy

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?

Aug 9, 2018 | China, Global Economy

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,...