China Macroeconomics & Academia

Christopher Balding

FX & Rates

The PBOC has released foreign exchange reserves data and the results are puzzling.  Even major investment banks releasing their notes on post-FX reserve analysis have expressed various degrees of bewilderment at the results.  Fundamentally, it is becoming increasingly difficult to reconcile the stock value of FX reserves and the flow changes we witness every month. There are numerous pieces of data that form our picture of the whole as to why we say this. Let’s break this down piece by piece…

The PBOC has released foreign exchange reserves data and the results are puzzling.  Even major investment banks releasing their notes on post-FX reserve analysis have expressed various degrees of bewilderment at the results.  Fundamentally, it is becoming increasingly difficult to reconcile the stock value of FX reserves and the flow changes we witness every month. There are numerous pieces of data that form our picture of the whole as to why we say this. Let’s break this down piece by piece…

A reoccurring theme is the contorted nature of the onshore and offshore RMB market.  Given some of the behavior we have outlined previously, it is not difficult to read into some of the outcomes heavy market intervention.  As an example, we have previously used, after the August 11 devaluation, the spot-futures spreads collapsed even as daily volatility quadrupled and depreciation expectations increased and were then realized. There are other data points if we dig into the calculations that…

A reoccurring theme is the contorted nature of the onshore and offshore RMB market.  Given some of the behavior we have outlined previously, it is not difficult to read into some of the outcomes heavy market intervention.  As an example, we have previously used, after the August 11 devaluation, the spot-futures spreads collapsed even as daily volatility quadrupled and depreciation expectations increased and were then realized. There are other data points if we dig into the calculations that…

Futures Market Imply Strengthening RMB: The CNH Carry Trade Play

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

China

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

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How the PBOC Is Sheltering FX Reserves

The PBOC has released foreign exchange reserves data and the results are puzzling. Even major investment banks releasing their notes on post-FX...

Christopher Balding

Futures Market Imply Strengthening RMB: The CNH Carry Trade Play

A reoccurring theme is the contorted nature of the onshore and offshore RMB market. Given some of the behavior we have outlined previously, it is...

Christopher Balding

A "Sudden Stop" For China in 2016?

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main...

John-Paul Smith

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Market Cap (USDm)

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