Economist, Centennial Asia Advisors

Jason Tan

Economist

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

Macroeconomics

We believe that the following factors will largely determine the outlook for Asian economic growth for the remainder of this year:<ul><li>
Receding drags from contractionary factors in 2015: Last year saw a confluence of negatives in many countries such as bad weather, low commodity prices and the initially negative effects of policy reforms that will be good for the long term. In many cases, these contractionary factors are diminishing in impact or reversing.</li></ul><ul><li>
Gathering recovery in global manufacturing:…</li></ul>

We believe that the following factors will largely determine the outlook for Asian economic growth for the remainder of this year:
Receding drags from contractionary factors in 2015: Last year saw a confluence of negatives in many countries such as bad weather, low commodity prices and the initially negative effects of policy reforms that will be good for the long term. In many cases, these contractionary factors are diminishing in impact or reversing.
Gathering recovery in global manufacturing:…

Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Asia Economist and CEO

Japanese Yen: The weakening has only just started <ul><li>
Both domestic and external demand weakening: Tertiary industry activity fell 0.1% m/m sa in February after +0.7% gain in January. The Nikkei-Markit Manufacturing PMI fell to a new low in April, with production and new orders falling sharply. Exports contracted 6.8% y/y in Mar 16, down from a 4.0% y/y decline in Feb 16. The even more precipitous import decline of 14.9% showed the dismal state of domestic demand. The earthquake in southern Japan is…</li></ul>

Japanese Yen: The weakening has only just started 
Both domestic and external demand weakening: Tertiary industry activity fell 0.1% m/m sa in February after +0.7% gain in January. The Nikkei-Markit Manufacturing PMI fell to a new low in April, with production and new orders falling sharply. Exports contracted 6.8% y/y in Mar 16, down from a 4.0% y/y decline in Feb 16. The even more precipitous import decline of 14.9% showed the dismal state of domestic demand. The earthquake in southern Japan is…

Weaker Yen Bad News for Asian Currencies; Brexit Risks Fall

FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January.  The market is being massaged to expect comprehensive easing including a further rate cut aimed at a weaker JPY.  This time around expect most of the action ahead of the BoJ meeting next week.  JPY may weaken near term, but will face significant resistance toward 115 and may be volatile after the meeting with little net new direction.  We continue to see market risks building in China; weak corporate bonds, rising yields, steadily declining CNY against its basket, steady capital outflow and lagging equities.  AUD has been boosted by iron ore and oil, but is diverging recently and may also be reflecting constrained confidence in China, notwithstanding recent improvement in economic activity.  We had returned our focus to long gold in recent days, but it may work better against a short JPY position.

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January.  The market is being massaged to expect comprehensive easing including a further rate cut aimed at a weaker JPY.  This time around expect most of the action ahead of the BoJ meeting next week.  JPY may weaken near term, but will face significant resistance toward 115 and may be volatile after the meeting with little net new direction.  We continue to see market risks building in China; weak corporate bonds, rising yields, steadily declining CNY against its basket, steady capital outflow and lagging equities.  AUD has been boosted by iron ore and oil, but is diverging recently and may also be reflecting constrained confidence in China, notwithstanding recent improvement in economic activity.  We had returned our focus to long gold in recent days, but it may work better against a short JPY position.

AmpGFX - BoJ's Deep Throat and China Market Risks Make Way for Higher Gold/JPY

China: Low quality rebound may not be sustainable; but short term will boost global demand<ul><li>A massive monetary and fiscal injection will further boost China’s growth in coming months but it will only add more capacity and leverage to a system awash in excess capacity and leverage.</li><li>China’s exports ended an eight-month contraction, with its top two markets, US and the EU, growing robustly. Import volumes have been healthy even as import values remain negative, positive for global demand.</li><li>But as China exports its surplus capacity, the pain it creates in industries such as steel will increase trade tensions and lead to a rise in protectionism which would also hurt other Asian exporters.</li></ul>

China: Low quality rebound may not be sustainable; but short term will boost global demandA massive monetary and fiscal injection will further boost China’s growth in coming months but it will only add more capacity and leverage to a system awash in excess capacity and leverage.China’s exports ended an eight-month contraction, with its top two markets, US and the EU, growing robustly. Import volumes have been healthy even as import values remain negative, positive for global demand.But as China exports its surplus capacity, the pain it creates in industries such as steel will increase trade tensions and lead to a rise in protectionism which would also hurt other Asian exporters.

Story of Global Trade Recovery Bolstered by China's Trade Upturn

The recent rising trend in the JPY and falling trend in the USD have had a life of their own this year, unwinding excessive positioning built up from end 2012 to mid-2015 for the JPY and from mid-2014 until January this year for the USD.  These trend reversals have contributed to the volatility in global markets that were being buffeted by the upheaval in Chinese markets and commodity prices, and more recently by Brexit fears. The rebounding JPY added to risk aversion, while the falling USD boosted risk appetite, the feedback from a falling to USD to a rising JPY added to the churn and uncertainty.  However, the JPY and USD have started to stabilize in recent days and excessive positioning appears to have been significantly cleansed, allowing markets to see more clearly improving conditions in Chinese and EM economies and focus on the rebound in commodity markets.  Brexit fears are likely to remain heightened and indeed may intensify as we approach the 23 June referendum.  This may tend to keep risk appetite and USD/JPY contained below 110.  But investors may still tend to seek out EM and commodity currencies to avoid negative rates and record low yields in major economies.  Brexit fears have weighed on European currencies and we may see further gains in EM and commodity currencies against the EUR.

The recent rising trend in the JPY and falling trend in the USD have had a life of their own this year, unwinding excessive positioning built up from end 2012 to mid-2015 for the JPY and from mid-2014 until January this year for the USD.  These trend reversals have contributed to the volatility in global markets that were being buffeted by the upheaval in Chinese markets and commodity prices, and more recently by Brexit fears. The rebounding JPY added to risk aversion, while the falling USD boosted risk appetite, the feedback from a falling to USD to a rising JPY added to the churn and uncertainty.  However, the JPY and USD have started to stabilize in recent days and excessive positioning appears to have been significantly cleansed, allowing markets to see more clearly improving conditions in Chinese and EM economies and focus on the rebound in commodity markets.  Brexit fears are likely to remain heightened and indeed may intensify as we approach the 23 June referendum.  This may tend to keep risk appetite and USD/JPY contained below 110.  But investors may still tend to seek out EM and commodity currencies to avoid negative rates and record low yields in major economies.  Brexit fears have weighed on European currencies and we may see further gains in EM and commodity currencies against the EUR.

AmpGFX - Calmer USD and JPY, Weaker EUR, More Upside for EM and Commodity Currencies

China

iShares FTSE A50 China Index ETF is an exchanged-traded fund established in Hong Kong. The investment objective of the iShares FTSE A50 China Index ETF is to provide investment results that, before fees and expenses, closely correspond to the performance of A50 Index.

iShares FTSE/Xinhua A50 China (2823 HK)

Drivers of Asian Growth - Part 1

We believe that the following factors will largely determine the outlook for Asian economic growth for the remainder of this year: Receding drags...

Jason Tan

Weaker Yen Bad News for Asian Currencies; Brexit Risks Fall

Japanese Yen: The weakening has only just started Both domestic and external demand weakening: Tertiary industry activity fell 0.1% m/m sa in...

Manu Bhaskaran

AmpGFX - BoJ's Deep Throat and China Market Risks Make Way for Higher Gold/JPY

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January. The market is being massaged to expect...

Greg Gibbs

Story of Global Trade Recovery Bolstered by China's Trade Upturn

China: Low quality rebound may not be sustainable; but short term will boost global demand A massive monetary and fiscal injection will further...

Manu Bhaskaran

AmpGFX - Calmer USD and JPY, Weaker EUR, More Upside for EM and Commodity Currencies

The recent rising trend in the JPY and falling trend in the USD have had a life of their own this year, unwinding excessive positioning built up...

Greg Gibbs