Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


Cross Asset Strategy

<ul>
<li>World economy skidding lower, led down by weak Chinese economy</li>
<li>Chinese monetary policy mysteriously ‘flat-lining’</li>
<li>Major policy ‘sea-change’ away from ‘growth’ towards ‘Yuan stability’</li>
<li>Unlikely, Chinese will embark on major policy stimulus</li>
<li>Bullish for Chinese government bonds… and growth stocks</li>
</ul>


World economy skidding lower, led down by weak Chinese economy
Chinese monetary policy mysteriously ‘flat-lining’
Major policy ‘sea-change’ away from ‘growth’ towards ‘Yuan stability’
Unlikely, Chinese will embark on major policy stimulus
Bullish for Chinese government bonds… and growth stocks


The World Economy Is Sinking … Will China Bail It Out Again?

<ul>
<li>Asian economic data show a sharp and accelerating decline</li>
<li>China is the main culprit</li>
<li>Slower Chinese economy has been correlated with lower bond yields</li>
<li>Could this warn of an upcoming policy error if QE tapering continues?</li>
</ul>


Asian economic data show a sharp and accelerating decline
China is the main culprit
Slower Chinese economy has been correlated with lower bond yields
Could this warn of an upcoming policy error if QE tapering continues?


<ul>
<li>Daily economic surprise indexes warn of sharp Chinese economic slowdown</li>
<li>This aligns with falling rates across Chinese yield structure</li>
<li>Moves unrelated to accommodative PBoC monetary policy</li>
<li>Chinese yields could fall another 50-100bp which is bullish for US Treasuries</li>
</ul>


Daily economic surprise indexes warn of sharp Chinese economic slowdown
This aligns with falling rates across Chinese yield structure
Moves unrelated to accommodative PBoC monetary policy
Chinese yields could fall another 50-100bp which is bullish for US Treasuries


SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

iShares China CNY Bond UCITS ETF / Equity Bottom-Up

<ul>
<li>
Over the first four months of 2021 the Xtrackers FTSE Vietnam Swap UCITS ETF, SPDR S&amp;P 500 ETF, SPDR Straits Times Index ETF, SPDR Dow Jones Industrial Average ETF and Nikko AM Singapore STI ETF were the strongest performers of SGX’s suite of 30 ETFs, averaging 13% total returns.  </li>
<li>
Of the five ETFs that were recipient to the highest net inflows over the four months, three were Fixed Income ETFs:  the ICBC CSOP FTSE Chinese Government Bond ETF, the iShares Barclays USD Asia High Yield Bond Index ETF and the ABF Singapore Bond Index Fund, which saw S$285 million of combined net inflows, 58% of the total net inflows.   </li>
<li>Combined AUM of the 30 ETFs is S$9.2 billion, up from S$5.5 billion 12 months ago. Equity and REIT ETFs have continued to represent 40% of the combined AUM. However, the share of Fixed Income ETF AUM within the total AUM has grown from 34% to 46%, while the share of Gold ETF AUM has declined from 27% to 16%. </li>
</ul>



Over the first four months of 2021 the Xtrackers FTSE Vietnam Swap UCITS ETF, SPDR S&amp;P 500 ETF, SPDR Straits Times Index ETF, SPDR Dow Jones Industrial Average ETF and Nikko AM Singapore STI ETF were the strongest performers of SGX’s suite of 30 ETFs, averaging 13% total returns.   

Of the five ETFs that were recipient to the highest net inflows over the four months, three were Fixed Income ETFs:  the ICBC CSOP FTSE Chinese Government Bond ETF, the iShares Barclays USD Asia High Yield Bond Index ETF and the ABF Singapore Bond Index Fund, which saw S$285 million of combined net inflows, 58% of the total net inflows.    
Combined AUM of the 30 ETFs is S$9.2 billion, up from S$5.5 billion 12 months ago. Equity and REIT ETFs have continued to represent 40% of the combined AUM. However, the share of Fixed Income ETF AUM within the total AUM has grown from 34% to 46%, while the share of Gold ETF AUM has declined from 27% to 16%. 


Equity ETFs Rank as Top YTD Performers, as Bond ETFs Capture Most Inflows 

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

China Merchants Bank H / Equity Bottom-Up

*Weak 4Q20 Bottom-Line: China Merchants Bank (3968.HK) [CMB] announced a poor set of preliminary 4Q20 results, with net profit declining CNY 6.1 bn (22.7%) on a linked quarter basis – this, despite having its tax rate decline 790 bp to 15.6% over the period; and*Best Retail Franchise Hitting Credit Wall: While CMB has the best retail franchise in mainland China, credit risk has substantially increased in 4Q20. We note a potential net new NPL increase of CNY 11.4 bn linked quarter for a whopping annualized increase in NPLs of 80.4%. Trouble is brewing in paradise.

*Weak 4Q20 Bottom-Line: China Merchants Bank (3968.HK) [CMB] announced a poor set of preliminary 4Q20 results, with net profit declining CNY 6.1 bn (22.7%) on a linked quarter basis – this, despite having its tax rate decline 790 bp to 15.6% over the period; and*Best Retail Franchise Hitting Credit Wall: While CMB has the best retail franchise in mainland China, credit risk has substantially increased in 4Q20. We note a potential net new NPL increase of CNY 11.4 bn linked quarter for a whopping annualized increase in NPLs of 80.4%. Trouble is brewing in paradise.  

China Merchants Bank – Massive 4Q20 Charge-Offs

China

iShares China CNY Bond UCITS ETF is an exchange-traded fund incorporated in Ireland. The Fund tracks the performances of the Bloomberg Barclays China Treasury + Policy Bank Total Return Index USD. Settlement: ICSD.

iShares China CNY Bond UCITS ETF (CNYB NA)

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iShares China CNY Bond UCITS ETF (CNYB NA)

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Michael J. Howell

China's Economy: Chips Or Cracks?

Daily economic surprise indexes show sharply lower Chinese economic momentum in early June. This should lead to 50-100bp cuts in rates along the...

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Equity ETFs Rank as Top YTD Performers, as Bond ETFs Capture Most Inflows

Over the first four months of 2021 the Xtrackers FTSE Vietnam Swap UCITS ETF, SPDR S&P 500 ETF, SPDR Straits Times Index ETF, SPDR Dow Jones...

Singapore Exchange Ltd (SGX)

China Merchants Bank – Massive 4Q20 Charge-Offs

CHINA MERCHANTS BANK: CMB announced a poor set of preliminary 4Q20 results, as profit declined 22.7% QOQ. Credit risk has substantially increased...

Thomas J. Monaco

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52-week Range

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