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.

Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Asia Economist and CEO

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

<ul><li>Chinese economic indicators pointed to a lacklustre domestic economy that is not showing any signs of an uptick, save for stronger consumption spending.</li><li>External pressures are growing for China . Furthermore, despite tepid domestic conditions, Chinese firms are extending their borrowing streak; cross-border claims continue to climb.</li><li>While the Yuan has hovered around a 4-year low, sparking speculation of a managed depreciation to spur growth, we do not think that a depreciation would be engineered by the government. Read more to see why.&nbsp;</li></ul>

Chinese economic indicators pointed to a lacklustre domestic economy that is not showing any signs of an uptick, save for stronger consumption spending.External pressures are growing for China . Furthermore, despite tepid domestic conditions, Chinese firms are extending their borrowing streak; cross-border claims continue to climb.While the Yuan has hovered around a 4-year low, sparking speculation of a managed depreciation to spur growth, we do not think that a depreciation would be engineered by the government. Read more to see why.&nbsp;

China: CNY Depreciation Fears Heighten, No Easy Policy Options

China: Economic decline evident from negative data releases<ul>
<li>
Industrial profits fell by 4.6% y/y in Oct 15, down from the 0.1% y/y decline in Sep 15.</li>
<li>
MNI Consumer Sentiment rose to 113.1 in Nov 15 (109.7 in Oct 15).</li>
<li>
MNI Business Sentiment Index fell to 49.9 in Nov 15, a 5-month low.</li>
<li>
Minxin manufacturing and non-manufacturing PMIs declined in Nov 15 to 42.4 and 42.9 in Sep 15 after two months of increases.</li>
<li>
Baidu SME Index for small- and medium-sized enterprises dropped to 98.2 in Nov 15 from 98.4…</li>
</ul>

China: Economic decline evident from negative data releases

Industrial profits fell by 4.6% y/y in Oct 15, down from the 0.1% y/y decline in Sep 15.

MNI Consumer Sentiment rose to 113.1 in Nov 15 (109.7 in Oct 15).

MNI Business Sentiment Index fell to 49.9 in Nov 15, a 5-month low.

Minxin manufacturing and non-manufacturing PMIs declined in Nov 15 to 42.4 and 42.9 in Sep 15 after two months of increases.

Baidu SME Index for small- and medium-sized enterprises dropped to 98.2 in Nov 15 from 98.4…


Economist, Centennial Asia Advisors

Jason Tan

Economist

<ul>
<li>
Retail sales rose by 11.0% y/y in Oct 15, up from 10.9% y/y in Sep 15.</li>
<li>
Activity indicators losing momentum: Fixed asset investment growth eased to 10.2% y/y in Oct 15, from 10.3% y/y in Sep 15. Industrial production grew 5.6% y/y in Oct 15, down from 5.7% y/y in Sep 15, the weakest rate since the aftermath of the global crisis.</li>
<li>
Money supply expanding but pockets of weakness: M2 money supply grew by 13.5% y/y in Oct 15 – a 13-month high, up from 13.1% y/y, in Sep 15. However, new loans of…</li>
</ul>



Retail sales rose by 11.0% y/y in Oct 15, up from 10.9% y/y in Sep 15.

Activity indicators losing momentum: Fixed asset investment growth eased to 10.2% y/y in Oct 15, from 10.3% y/y in Sep 15. Industrial production grew 5.6% y/y in Oct 15, down from 5.7% y/y in Sep 15, the weakest rate since the aftermath of the global crisis.

Money supply expanding but pockets of weakness: M2 money supply grew by 13.5% y/y in Oct 15 – a 13-month high, up from 13.1% y/y, in Sep 15. However, new loans of…


China: Economic Slowdown Cushioned by Domestic Consumption

<ul><li>The Chinese economy continues on its abysmal path: Trade flows and inflationary pressures are weak even as PMIs show some signs of tentative stabilisation. This could herald the opening of stimulus taps by the central government in a bid to shore up growth.</li><li>Contrary to news reports, the anti-corruption campaign initiated by President Xi Jinping to catch "tigers and flies" show no sign of abating - the focus has now turned to SOEs. Four notable figures&nbsp;have been arrested for investigation in the past week. This concerted anti-graft crackdown will continue to exact a&nbsp;toll on economic activity.</li><li>Finally, looking longer-term, in its recently released 13th Five-Year Plan, the powers-that-be in China have determined the GDP target for 2016-2020 to be 6.5% annually. Innovation will be a key tenet in economic growth going forward. There will also be greater competition in previously sheltered industries while the internationalisation of the Chinese Yuan will proceed smoothly with greater liberalisation and convertibility.</li></ul>

The Chinese economy continues on its abysmal path: Trade flows and inflationary pressures are weak even as PMIs show some signs of tentative stabilisation. This could herald the opening of stimulus taps by the central government in a bid to shore up growth.Contrary to news reports, the anti-corruption campaign initiated by President Xi Jinping to catch "tigers and flies" show no sign of abating - the focus has now turned to SOEs. Four notable figures&nbsp;have been arrested for investigation in the past week. This concerted anti-graft crackdown will continue to exact a&nbsp;toll on economic activity.Finally, looking longer-term, in its recently released 13th Five-Year Plan, the powers-that-be in China have determined the GDP target for 2016-2020 to be 6.5% annually. Innovation will be a key tenet in economic growth going forward. There will also be greater competition in previously sheltered industries while the internationalisation of the Chinese Yuan will proceed smoothly with greater liberalisation and convertibility.

China in focus: Aspects of the Middle Kingdom

China

iShares MSCI China ETF is an exchange-traded fund incorporated in the USA. The ETF seeks to track the performance of the MSCI China Index. The Index is a free float adjusted market cap weighted index designed to measure the performance of equity securities in the top 85% in market cap of Chinese equity markets, as represented by the A-Shares, H-Shares, B-Shares, Red Chips, & P-Chips.

iShares MSCI China ETF (MCHI US)

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

China: CNY Depreciation Fears Heighten, No Easy Policy Options

Chinese economic indicators pointed to a lacklustre domestic economy that is not showing any signs of an uptick, save for stronger consumption...

Manu Bhaskaran

Cross-Straits Warning Signs

China: Economic decline evident from negative data releases Industrial profits fell by 4.6% y/y in Oct 15, down from the 0.1% y/y decline in Sep...

Manu Bhaskaran

China: Economic Slowdown Cushioned by Domestic Consumption

Retail sales rose by 11.0% y/y in Oct 15, up from 10.9% y/y in Sep 15. Activity indicators losing momentum: Fixed asset investment growth eased...

Jason Tan

China in focus: Aspects of the Middle Kingdom

The Chinese economy continues on its abysmal path: Trade flows and inflationary pressures are weak even as PMIs show some signs of tentative...

Jason Tan