In today’s briefing:
- Steno Signals #61 – The End of China as We Know It?
- Positioning Watch: Is Anyone Even Invested in China at This Stage?
- Portfolio Watch: Catching a Chinese Cold?
- Back with a Bang! – Macro and Sentiment Call for an Underweight in Equities
- EM By EM #17 China: Real Estate Complex and The “Phony” Stimulus
- Macro Strategy Nugget: Why USDCNH > or < 7.30 is everything you need to watch
- Rates & FX nugget: The PBoC doom-loop
- The Week That Was in ASEAN@Smartkarma – Sea Ltd’s Rout, GoTo’s Budget Focus, and Indosat’s Surge
- Malaysia: State Elections Bolster Anwar Near-Term; Long-Term PAS Shadow Grows
- Traders Remain Neutral Commodities // Copper Loses as China Falls Apart
Steno Signals #61 – The End of China as We Know It?
- Happy Sunday and welcome to our flagship editorial! Everyone seems to have been occupied with Chinese doom-mongering over the past week as the malaise in the Real Estate sector is now out in the open once again.
- It is obvious to everyone that China is stuck in a mess but how grave are the issues really?
- Another couple of trading days as we have had last week and we will be back at the abysmal October lows in traded property stocks, which prompted or even forced the CCP to initiate a surprise reopening of the economy in November last year.
Positioning Watch: Is Anyone Even Invested in China at This Stage?
- We hope you have enjoyed our China Week coverage with extensive analysis on the ongoing malaise in Chinese Real Estate.
- Positioning in CNY markets is an underreported angle in the discussion on China as it may help guide asset performance from here, now that everyone and their mother agrees that China is stuck in a mess.
- Are international investors even involved in China anymore?
Portfolio Watch: Catching a Chinese Cold?
- Hello everybody and welcome back to our weekly Portfolio Watch! This week we have witnessed considerable turmoil in the markets, and it would be an exaggeration to claim that we’ve emerged from it unscathed.
- A few positions have been stopped-out but it is some source of consolation that our strongest conviction trades remain performers in an otherwise red massacre in financial markets. We have been rather vocal about our major conviction of a steepening of the yield curve was if not inevitable then at least very favourable on a r/r basis.
- I too have clearly declared my aversion against the momentum of risk assets.
Back with a Bang! – Macro and Sentiment Call for an Underweight in Equities
- China could become a ‘Credit Event.’ Despite a slew of new stimulus measures by the Chinese government, they are not comprehensive enough to rule out one or more credit events.
- 200-Day moving averages hit. Several equity market indices have dipped below their 200-day moving average, including the MSCI Emerging Markets Index.
- Response to the latest US inflation figure. In contrast to previous favorable inflation figures, American stocks closed lower on the day following the publication.
EM By EM #17 China: Real Estate Complex and The “Phony” Stimulus
- In the past month, the focus of the markets revolved around the Bank of Japan and now August appears to have shifted its attention towards China.
- Surprisingly, Japan’s current economic performance seems to be outpacing that of China- a sentence that would have merited a straightjacket and a padded room not long ago.
- In my last PBoC piece on the “The People’s Bank Pickle” I outlined the conflicting monetary policy objectives within China, and how that circumstance would impose on them to commit to one at the expense of the other- in short defending the Remnibi would prevent the PBoC to address the domestic trend of deflation.
Macro Strategy Nugget: Why USDCNH > or < 7.30 is everything you need to watch
- In our “Nugget series” we aim at visualizing the most important themes in global macro with a few timely charts and very few words.
- This nugget will show why USDCNH is the by far most important global bellwether at this stage and why 7.20 (or 7.30) will serve as the most important level to watch in global macro.
- Let’s look at 3 charts why USDCNH is a very binary predictor of risk assetsUSDCNY has served as a risk asset barometer around key intervention levels.
Rates & FX nugget: The PBoC doom-loop
- In our “Nugget series” we aim at visualizing the most important themes in global macro with a few timely charts and very few words.
- Today we will explain the market moves of the day with our “PBoC doom loop”.
- Today’s market in short: A rebound in CNY after intervention above 7.30 against the USD, a sharp move higher in USDJPY and higher USD rates.
The Week That Was in ASEAN@Smartkarma – Sea Ltd’s Rout, GoTo’s Budget Focus, and Indosat’s Surge
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
- The past week saw insights on Sea (SE US), GoTo (GOTO IJ), Indosat (ISAT IJ), Bumrungrad Hospital (BH TB), Home Product Center (HMPRO TB), and Vinfast (VFS US).
- There was also an insight on Bank CIMB Niaga (BNGA IJ) plus insight looking at Chinese involvement in the South-East Asia data centre market.
Malaysia: State Elections Bolster Anwar Near-Term; Long-Term PAS Shadow Grows
- PM Anwar was strengthened in the near-term by PH comfortably winning the 3 states where it was the incumbent, although the alliance helped UMNO gain leverage in Negri Sembilan.
- PAS won landslide victories in Kelantan, Terengganu and Kedah (three states that were part of Thailand until 1909, with smaller non-Malay populations). Bersatu is a token junior partner everywhere.
- As the prospect of PAS gaining national power grows, non-Malay emigration and capital flight will increase, reversing the positive gain from the PKR-DAP vision of renewed strength for multi-racialism.
Traders Remain Neutral Commodities // Copper Loses as China Falls Apart
- Orange juice futures hit an all-time high last week as citrus crops all across the US have been hammered by a series of hurricanes and the spread of citrus greening, an incurable disease spread by insects.
- The vast majority of oranges produced in the US come from Florida, which has been hobbled by hurricanes and a cold snap, massively hampering supply.
- Such headwinds are responsible for the supply shortage in oranges, which has driven up prices that will eventually filter through to consumers.
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