China Macroeconomics & Academia

Christopher Balding

Macroeconomics

Despite the seeming aura of calm that had descended on the RMB and PBOC foreign exchange reserves the past few months, this was a deceptive peace.  The stabilization of PBOC FX reserves was driven almost exclusively by back to back months where either the EUR or the JPY each fell by more than 5% against the USD in one month.  During this same time period, outflows continued to grow rapidly as foreign inflows dropped almost 40%.In the past days, the CNY/CNH spread has drifted apart brought back…

Despite the seeming aura of calm that had descended on the RMB and PBOC foreign exchange reserves the past few months, this was a deceptive peace.  The stabilization of PBOC FX reserves was driven almost exclusively by back to back months where either the EUR or the JPY each fell by more than 5% against the USD in one month.  During this same time period, outflows continued to grow rapidly as foreign inflows dropped almost 40%.In the past days, the CNY/CNH spread has drifted apart brought back…

Thematic (Sector/Industry)

As the debate about the sustainability about the increase in Chinese credit has grown, a number of points have been raised about why China simply cannot have some type of financial crisis or even needs more debt.  Though I believe a near term financial crisis is an extremely low but rising probability event, it is clear that the optimism about Chinese debt levels or growth ranges from misguided to uninformed.  Let us elucidate some of these.Myth #1: China has high savings rates.  This is…

As the debate about the sustainability about the increase in Chinese credit has grown, a number of points have been raised about why China simply cannot have some type of financial crisis or even needs more debt.  Though I believe a near term financial crisis is an extremely low but rising probability event, it is clear that the optimism about Chinese debt levels or growth ranges from misguided to uninformed.  Let us elucidate some of these.Myth #1: China has high savings rates.  This is…

As PBOC FX reserves have stabilized, due primarily to revaluation of EUR and JPY holdings, the story has started to circulate that capital outflows from China have declined.  There is little understanding for the channels via which this is happening.  The primary channel for capital outflows from China was overpayment of goods imports and not official portfolio or direct investment.Since March 1, the noted discrepancy between bank payment for imports and the Customs reported value of imports has…

As PBOC FX reserves have stabilized, due primarily to revaluation of EUR and JPY holdings, the story has started to circulate that capital outflows from China have declined.  There is little understanding for the channels via which this is happening.  The primary channel for capital outflows from China was overpayment of goods imports and not official portfolio or direct investment.Since March 1, the noted discrepancy between bank payment for imports and the Customs reported value of imports has…

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.

For the most part we focus on loans and other assets in terms of risk. But contingent liabilities should not be forgotten. These can prove to be a surprising source of bad loans, as in the initial stages these facilities are not even on the balance sheet. They are classified as contingent liabilities, and they are contained off-balance sheet. These include credit commitments, letters of credit, loan guarantees and acceptances. Companies pay a fee for these facilities, and there is generally no…

For the most part we focus on loans and other assets in terms of risk. But contingent liabilities should not be forgotten. These can prove to be a surprising source of bad loans, as in the initial stages these facilities are not even on the balance sheet. They are classified as contingent liabilities, and they are contained off-balance sheet. These include credit commitments, letters of credit, loan guarantees and acceptances. Companies pay a fee for these facilities, and there is generally no…

The world and China is discussing in hushed tones the recent exclusive interview given by an “authoritative” person which talked about the need for China to deleverage and how debt cannot continue to increase.  Most have called this a shift in economic policy signaling Chinese intent to get the problem under control.I think we need to be much more cautious about interpreting this as any type of fundamental shift in policy.  Let me give you a number of reasons why.  First, in China an…

The world and China is discussing in hushed tones the recent exclusive interview given by an “authoritative” person which talked about the need for China to deleverage and how debt cannot continue to increase.  Most have called this a shift in economic policy signaling Chinese intent to get the problem under control.I think we need to be much more cautious about interpreting this as any type of fundamental shift in policy.  Let me give you a number of reasons why.  First, in China an…

The Authoritative Person and the Path of Chinese Growth

China

Northeast Securities Co., Ltd. provides securities brokerage, trading, underwriting, asset management, investment consulting, and other financial services.

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Northeast Securities (000686 CH)

RMB Focus: It Was Too Good to Last

Despite the seeming aura of calm that had descended on the RMB and PBOC foreign exchange reserves the past few months, this was a deceptive peace. ...

Christopher Balding

Why China Debt Bulls Are Mostly Wrong

As the debate about the sustainability about the increase in Chinese credit has grown, a number of points have been raised about why China simply...

Christopher Balding

Changing Composition of RMB Outflows

As PBOC FX reserves have stabilized, due primarily to revaluation of EUR and JPY holdings, the story has started to circulate that capital outflows...

Christopher Balding

China: Contingent Liabilities

For the most part we focus on loans and other assets in terms of risk. But contingent liabilities should not be forgotten. These can prove to be a...

Daniel Tabbush

The Authoritative Person and the Path of Chinese Growth

The world and China is discussing in hushed tones the recent exclusive interview given by an “authoritative” person which talked about the need for...

Christopher Balding

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