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

<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

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 US labour data were strong enough along with faster wage growth to generate discussion of rate hikes beyond the now very probable December hike.&nbsp; This has pushed two-year US rates to a new cyclical high, widening the USD yield advantage in particular against the EUR and JPY to new cyclical wides.&nbsp; The US economy is showing resilience to weaker emerging markets and a weaker energy sector and should continue to support the USD into next year.&nbsp; The Chinese trade data continues to show pressures on external and internal demand.&nbsp; Iron ore import volume was weaker and combined with a steady decline in Chinese steel prices and production, point to a weaker outlook for the AUD.&nbsp; The RBA has downgraded its view on China in recent months acknowledging that heavy industrial sectors may be weaker than the official industrial production data suggest, and worrying that Chinese government efforts to support fixed asset investment in the last year have failed to arrest the decline.&nbsp; The Australian employment and Chinese activity data will be key for near term direction in the AUD.

The US labour data were strong enough along with faster wage growth to generate discussion of rate hikes beyond the now very probable December hike.&nbsp; This has pushed two-year US rates to a new cyclical high, widening the USD yield advantage in particular against the EUR and JPY to new cyclical wides.&nbsp; The US economy is showing resilience to weaker emerging markets and a weaker energy sector and should continue to support the USD into next year.&nbsp; The Chinese trade data continues to show pressures on external and internal demand.&nbsp; Iron ore import volume was weaker and combined with a steady decline in Chinese steel prices and production, point to a weaker outlook for the AUD.&nbsp; The RBA has downgraded its view on China in recent months acknowledging that heavy industrial sectors may be weaker than the official industrial production data suggest, and worrying that Chinese government efforts to support fixed asset investment in the last year have failed to arrest the decline.&nbsp; The Australian employment and Chinese activity data will be key for near term direction in the AUD.

AmpGFX - RBA more nervous over China outlook

Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

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.
​
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.

Macquarie, CLSA, Bloomberg and the FT, to name but a few, have been out in force recently looking for the Chinese corporate debt &lsquo;bubble&rsquo;. Not one to fear wading into the debate, we have highlighted a few key charts to discuss the issue.

Macquarie, CLSA, Bloomberg and the FT, to name but a few, have been out in force recently looking for the Chinese corporate debt &lsquo;bubble&rsquo;. Not one to fear wading into the debate, we have highlighted a few key charts to discuss the issue.

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul><li>It is worth remembering that in the rate routing of years 2000 and 2001, US banks saw profit and ROA come under reasonable pressure, with a sharp rise in bad loans. </li><li>China’s banks begin this period of rampant rate cuts with margins at half the level that US banks had in year 2000.</li><li>High frequency, multiple rate cuts is the quintessential sign of economic weakness, with the inherent admission of it getting worse and worse.  </li><li>Add to this the removal of the <a href="http://www.smartkarma.com/insights/china-banks-thin-line" target="_blank">LDR ceiling</a>; lower deposit reserve ratios; and subsidized lending programs, and the signals could not be clearer.</li><li>It is not only about a slowing economy and a likely NPL cycle, but also, lower net interest margins.</li></ul>

It is worth remembering that in the rate routing of years 2000 and 2001, US banks saw profit and ROA come under reasonable pressure, with a sharp rise in bad loans. China’s banks begin this period of rampant rate cuts with margins at half the level that US banks had in year 2000.High frequency, multiple rate cuts is the quintessential sign of economic weakness, with the inherent admission of it getting worse and worse.  Add to this the removal of the LDR ceiling; lower deposit reserve ratios; and subsidized lending programs, and the signals could not be clearer.It is not only about a slowing economy and a likely NPL cycle, but also, lower net interest margins.

US Experience in the Past, a Worry for China Banks Now

Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Asia Economist and CEO

<ul><li>IMF representatives have reportedly informed Chinese officials that the Chinese Yuan or renminbi (RMB) will indeed be included in the fund's basket of reserve currencies, or the Special Drawing Rights (SDR).&nbsp;</li><li>We think that the inclusion of the RMB into the SDR basket will be more a geopolitical signal than a real economic game changer for China. It will affirm China's growing clout on the world stage and its shift towards a more market-based economy.</li><li>Just because the RMB is part of the SDR does not necessitate the holding of the Chinese currencies by countries and private entities. A surge into the RMB-denominated assets is not expected as concerns remain&nbsp;over the capital account restrictions and limitations of using the Chinese currency.</li></ul>

IMF representatives have reportedly informed Chinese officials that the Chinese Yuan or renminbi (RMB) will indeed be included in the fund's basket of reserve currencies, or the Special Drawing Rights (SDR).&nbsp;We think that the inclusion of the RMB into the SDR basket will be more a geopolitical signal than a real economic game changer for China. It will affirm China's growing clout on the world stage and its shift towards a more market-based economy.Just because the RMB is part of the SDR does not necessitate the holding of the Chinese currencies by countries and private entities. A surge into the RMB-denominated assets is not expected as concerns remain&nbsp;over the capital account restrictions and limitations of using the Chinese currency.

Inclusion of the Renminbi in the SDR basket

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)

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

AmpGFX - RBA more nervous over China outlook

The US labour data were strong enough along with faster wage growth to generate discussion of rate hikes beyond the now very probable December...

Greg Gibbs

Bond bubble in China? Not at the moment

Macquarie, CLSA, Bloomberg and the FT, to name but a few, have been out in force recently looking for the Chinese corporate debt ‘bubble’. Not one...

Mark Artherton

US Experience in the Past, a Worry for China Banks Now

It is worth remembering that in the rate routing of years 2000 and 2001, US banks saw profit and ROA come under reasonable pressure, with a sharp...

Daniel Tabbush

Inclusion of the Renminbi in the SDR basket

IMF representatives have reportedly informed Chinese officials that the Chinese Yuan or renminbi (RMB) will indeed be included in the fund's...

Manu Bhaskaran