China Macroeconomics & Academia

Christopher Balding

Macroeconomics

Now that the RMB has breached 6.7 there are questions about the future of the RMB and whether this signals the breaching of a key resistance line that may signal an acceleration of depreciation.  While the psychology of a specific number cannot be under estimated, we see little reason for any significant shift in outflow or depreciation speed around 6.7.First, we know that capital outflows continue largely unchanged with most estimates placing them on a three month moving average around $50…

Now that the RMB has breached 6.7 there are questions about the future of the RMB and whether this signals the breaching of a key resistance line that may signal an acceleration of depreciation.  While the psychology of a specific number cannot be under estimated, we see little reason for any significant shift in outflow or depreciation speed around 6.7.First, we know that capital outflows continue largely unchanged with most estimates placing them on a three month moving average around $50…

How Important Is the 6.7 Barrier for the RMB?

Foreign exchange reserves in China continued to fall in august, though at a slow pace. Reserves decreased to $3.19 trillion in August, a $15.89 billion drop. This decrease is small compared to a year ago, when reserves fell by $93.93 billion from July to August. Reserves have remained largely unchanged in 2016, though figures in August were the lowest since December 2011.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/014/298/original/Figure%201.jpg?1475822687" class="editor-image img-responsive" data-smartkarma-image-id="14298"></figure>Looking at Chinese reserves in terms of non-USD currencies helps explain both the downward trend since 2014 and the more…

Foreign exchange reserves in China continued to fall in august, though at a slow pace. Reserves decreased to $3.19 trillion in August, a $15.89 billion drop. This decrease is small compared to a year ago, when reserves fell by $93.93 billion from July to August. Reserves have remained largely unchanged in 2016, though figures in August were the lowest since December 2011.Looking at Chinese reserves in terms of non-USD currencies helps explain both the downward trend since 2014 and the more…

What's Happening with Chinese FX Reserves?

China became a net capital exporter for the first time in 2014 as outward direct investment (ODI) overtook foreign direct investment (FDI). Financial liberalization, innovation and the pursuit of stability have been, for the PBOC, driving forces towards sector reforms and RMB internationalization.With the progressive loosening of capital controls by the PBOC, capital accounts are becoming increasingly open. As the internationalisation of the RMB continues, capital inflows and outflows are…

China became a net capital exporter for the first time in 2014 as outward direct investment (ODI) overtook foreign direct investment (FDI). Financial liberalization, innovation and the pursuit of stability have been, for the PBOC, driving forces towards sector reforms and RMB internationalization.With the progressive loosening of capital controls by the PBOC, capital accounts are becoming increasingly open. As the internationalisation of the RMB continues, capital inflows and outflows are…

The focus on the recent strong growth in headline financing growth has raised concerns about underlying demand for credit and continued reliance on investment to drive growth.  However, the headline data fails to capture the important underlying trends that are important grasp the change in Chinese financing.Beginning with the aggregate YTD changes in financing, in Figure 1, we actually see that most types of financing are up strongly.  Only two categories of financing are down in 2016…

The focus on the recent strong growth in headline financing growth has raised concerns about underlying demand for credit and continued reliance on investment to drive growth.  However, the headline data fails to capture the important underlying trends that are important grasp the change in Chinese financing.Beginning with the aggregate YTD changes in financing, in Figure 1, we actually see that most types of financing are up strongly.  Only two categories of financing are down in 2016…

Chinese Credit Growth Is Shifting Where It Grows Not How Much It Grows

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)

Benign NPL formation in the latest quarter for China’s banks is not only due to write-offs. More likely, there is a significant amount of rescheduling happening behind the scenes, which is not totally clear on the surface. At the same time, there can be a shifting of certain assets (like loans) into held-to-maturity or other asset accounts, which obfuscate the analysis or need for NPL disclosure. The impact of this will be worsening net interest income and margins, which is what banks are now…

Benign NPL formation in the latest quarter for China’s banks is not only due to write-offs. More likely, there is a significant amount of rescheduling happening behind the scenes, which is not totally clear on the surface. At the same time, there can be a shifting of certain assets (like loans) into held-to-maturity or other asset accounts, which obfuscate the analysis or need for NPL disclosure. The impact of this will be worsening net interest income and margins, which is what banks are now…

China

The MSCI Em (Emerging Markets) Index is a free-float weighted equity index that captures large and mid cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

MSCI Emerging Markets Index (MXEF INDEX)

How Important Is the 6.7 Barrier for the RMB?

Now that the RMB has breached 6.7 there are questions about the future of the RMB and whether this signals the breaching of a key resistance line...

Christopher Balding

What's Happening with Chinese FX Reserves?

Foreign exchange reserves in China continued to fall in august, though at a slow pace. Reserves decreased to $3.19 trillion in August, a $15.89...

Christopher Balding

RMB FX Flow Report

China became a net capital exporter for the first time in 2014 as outward direct investment (ODI) overtook foreign direct investment (FDI)....

Christopher Balding

Chinese Credit Growth Is Shifting Where It Grows Not How Much It Grows

The focus on the recent strong growth in headline financing growth has raised concerns about underlying demand for credit and continued reliance on...

Christopher Balding

China Asset Risk Clear in Margin Data

Benign NPL formation in the latest quarter for China’s banks is not only due to write-offs. More likely, there is a significant amount of...

Daniel Tabbush