Junior Finance Analyst, Steno Research

Ulrik Simmelholt

Junior Finance Analyst

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

Macroeconomics

<ul>
<li>Xi kickstarting listed sectors in China using different policy tools will impact foreign markets</li>
<li>Biden looks like the winner in our four scenarios whereas Xi and MBS’ newly friendship could be tested</li>
<li>Chinese FDIs flows have already slowly but surely started to turn more positive from a rate of change perspective, which may be an early harbinger of slightly better times ahead for Chinese assets</li>
</ul>


Xi kickstarting listed sectors in China using different policy tools will impact foreign markets
Biden looks like the winner in our four scenarios whereas Xi and MBS’ newly friendship could be tested
Chinese FDIs flows have already slowly but surely started to turn more positive from a rate of change perspective, which may be an early harbinger of slightly better times ahead for Chinese assets


China Asset Watch: Keys for Xi to Getting the Economy and Equities Back Going

<ul><li>Steno Research: Stubbornness despite Chinese demand woes As China’s economic woes deepen with the housing market slumps, we note that the demand side in the energy space looks just as fragile as the supply side.</li><li>Sure, China might be taking advantage of the Russian discount, but the Ruble is down some 30% against the CNY year-to-date so it is not catching a bid that one would otherwise expect.</li><li>With Country Garden (potentially) defaulting on fixed-income payments expect more weakness to show up in CNY pairs, which in turn adds even weaker commodity demand from China.</li></ul>

Steno Research: Stubbornness despite Chinese demand woes As China’s economic woes deepen with the housing market slumps, we note that the demand side in the energy space looks just as fragile as the supply side.Sure, China might be taking advantage of the Russian discount, but the Ruble is down some 30% against the CNY year-to-date so it is not catching a bid that one would otherwise expect.With Country Garden (potentially) defaulting on fixed-income payments expect more weakness to show up in CNY pairs, which in turn adds even weaker commodity demand from China.

The Energy Cable #33 – The handoff – From positioning to fundamentals

Head of Research, Steno Research

Emil Moller

Head of Research

<ul><li>Conclusions up-front: – As the PBoC confronts Yuan depreciation and counters deflationary momentum, the continued divergence between these challenges will strain the central bank’s ability to effectively manage both – Whatever policy trajectory PBoC chooses there will be uncomfortable trade-offs – We remain confident that the PBoC will defend the Yuan at the 7.30 levelIn light of the ongoing measures taken by Chinese authorities to tackle issues within the real estate sector, the recent rate cuts announcement, along with discouraging concrete data and the persistent depreciation of the Yuan, we find it pertinent to examine the existing state of monetary policy in China:PBoC is essentially caught between a rock and a hard place if the current headwinds keep mounting.</li><li>Eventually, they could be forced to pick a side between two objectives:On one hand, China is dealing with a declining nominal demand problem which is reflected in the depressed CPI.</li><li>That is what last night’s rate cuts are designed to address.</li></ul>

Conclusions up-front: – As the PBoC confronts Yuan depreciation and counters deflationary momentum, the continued divergence between these challenges will strain the central bank’s ability to effectively manage both – Whatever policy trajectory PBoC chooses there will be uncomfortable trade-offs – We remain confident that the PBoC will defend the Yuan at the 7.30 levelIn light of the ongoing measures taken by Chinese authorities to tackle issues within the real estate sector, the recent rate cuts announcement, along with discouraging concrete data and the persistent depreciation of the Yuan, we find it pertinent to examine the existing state of monetary policy in China:PBoC is essentially caught between a rock and a hard place if the current headwinds keep mounting.Eventually, they could be forced to pick a side between two objectives:On one hand, China is dealing with a declining nominal demand problem which is reflected in the depressed CPI.That is what last night’s rate cuts are designed to address.

China Watch: The People’s Bank Pickle – is 7.30 the line in the sand?

Geopolitical Analyst, Steno Research, Steno Research

Mikkel Rosenvold

Geopolitical Analyst, Steno Research

<ul>
<li>On August 9th, President Biden signed an executive order which addresses investment from US companies and individuals into China.</li>
<li>The executive order is a follow-up on the October 7, 2022 order to ban exports of advanced chips and other strategic technology, but the executive order focuses on investment in Chinese firms that operate in these areas, which was seen as a loophole in the October 7 order.</li>
<li>The Investment Screening order stipulates certain areas that are simply banned from investments, some areas where the government needs to be notified and then some areas that are completely exempt.</li>
</ul>


On August 9th, President Biden signed an executive order which addresses investment from US companies and individuals into China.
The executive order is a follow-up on the October 7, 2022 order to ban exports of advanced chips and other strategic technology, but the executive order focuses on investment in Chinese firms that operate in these areas, which was seen as a loophole in the October 7 order.
The Investment Screening order stipulates certain areas that are simply banned from investments, some areas where the government needs to be notified and then some areas that are completely exempt.


Investment Screening: Why Biden’s Order is Actually a Good Sign for US-China Relations

Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Cross Asset Strategy

<ul>
<li>We have spent this Sunday evening trying to prepare ourselves for the opening given the turmoil expected in China after Country Gardens (the former largest developer) is to suspend trading of at least 10 onshore bonds after a week where they failed to pay coupons of a couple of international payments.</li>
<li>The Hang Seng Property Index (HSP) is down 20% y-t-d but only lost 0.2% on Friday despite another landslide in the Country Garden stock.</li>
<li>If the HSP Index drops over the coming days, it ought to be taken as a signal that Chinese RE credit will decline further due to a lack of confidence in the financial system.</li>
</ul>


We have spent this Sunday evening trying to prepare ourselves for the opening given the turmoil expected in China after Country Gardens (the former largest developer) is to suspend trading of at least 10 onshore bonds after a week where they failed to pay coupons of a couple of international payments.
The Hang Seng Property Index (HSP) is down 20% y-t-d but only lost 0.2% on Friday despite another landslide in the Country Garden stock.
If the HSP Index drops over the coming days, it ought to be taken as a signal that Chinese RE credit will decline further due to a lack of confidence in the financial system.


Asset Allocation Watch: Country Garden Melt-Down? 5 Charts on Cross-Asset Spill-Overs!

China

The Chinese renminbi (yuan) is the official currency of The People's Republic of China. 

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China Asset Watch: Keys for Xi to Getting the Economy and Equities Back Going

Xi kickstarting listed sectors in China using different policy tools will impact foreign markets. Biden looks like the winner in our four scenarios...

Steno Research

The Energy Cable #33 – The handoff – From positioning to fundamentals

Steno Research: Stubbornness despite Chinese demand woes As China’s economic woes deepen with the housing market slumps, we note that the demand...

Steno Research

China Watch: The People’s Bank Pickle – is 7.30 the line in the sand?

As the PBoC confronts Yuan depreciation and counters deflationary momentum, the continued divergence between these challenges will strain...

Steno Research

Investment Screening: Why Biden’s Order is Actually a Good Sign for US-China Relations

On August 9th, President Biden signed an executive order which addresses investment from US companies and individuals into China. The executive...

Steno Research

Asset Allocation Watch: Country Garden Melt-Down? 5 Charts on Cross-Asset Spill-Overs!

We have spent this Sunday evening trying to prepare ourselves for the opening given the turmoil expected in China after Country Gardens (the former...

Steno Research

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