Founder of Antler Capital

Stanley Tsai, CFA

Stanley has over 20 years of capital markets experience on the buy side and sell side and as a credit analyst. He is the founder of Antler Capital, the culmination of his efforts to deliver differentiated solutions to global investors since 2021.

From 2017 to 2021, he was a Managing Director at CSPI Ratings, a credit rating agency servicing the USD bond market. He also led the firm’s efforts in sustainable finance.

Prior to that, he held various roles at Keefe, Bruyette & Woods, Nighthawk Capital, CLSA and Fitch Ratings. He was also an advisor at WWF, supporting the organization’s bankable nature solutions program.

Stanley has an honors degree in Finance from the University of British Columbia. He has been a CFA charterholder since 2004.

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Macroeconomics

China's resilient export performance in October was a pleasant surprise amid a confluence of bad news on the domestic front. But export strength may be dwindling and progressively tougher comps are not the only factor to blame.
A record trade surplus. Overseas shipments once again topped estimates in October, driving the country's monthly trade surplus to USD84.5bn, the highest on record. The 27.1% growth in exports was propelled by robust global trade activity. China has also been getting a greater share of export orders thanks to still sluggish outputs from competing nations that have yet to return to full capacity. Early Christmas orders to beat shipment delays provided an extra boost (Exhibit 1).
However, price inflation has become the dominant driver, while unit growth has tailed off. Average export prices began to tick up in July and jumped over 10% y/y in September. Overseas buyers will be feeling the pinch of China's surging factory gate prices this Christmas. But more importantly, rising unit prices may suggest that we are now much farther along in the reopening trade in China's key export markets. Demand has shifted considerably from essential to discretionary items. That story may run out of steam soon.
Europe presents additional uncertainties in the coming months, as a spike in infections threatens to throttle its recovery. The EU was pivotal to China's export strength last month, buffering the deceleration in US orders. It remains to be seen whether a wider outbreak on the continent will be a hit to export demand or a catalyst for resurgent sales of household / electronics merchandise. What's more certain is the eventual rebound of Southeast Asia, which will chip away at orders for Chinese exports, especially if power shortages escalate in the winter months.
Price effects will likely continue to drive exports in machinery, electronics and home appliances as we approach the holiday season. That is bad news for international consumers. The average household appliance unit shipped in September had an invoice price of USD26, up almost 55% from January 2020. On a lighter note, auto exports have been a bright spot all year despite supply chain disruptions, fueled by sales of new energy vehicles. And China has Elon Musk to thank for it. 
<table class="table table-striped">
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<td style="width: 100%;">Exhibit 1: China's Export / Import Growth and Trade Balance</td>
</tr>
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<td style="width: 100%;">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/449/original/image_225136958701636405007254.png?1636405007" class="editor-image img-responsive" data-smartkarma-image-id="240449"></figure>
</td>
</tr>
<tr>
<td style="width: 100%;">Sources: General Administration of Customs, Our analysis </td>
</tr>
</tbody>
</table>

China's resilient export performance in October was a pleasant surprise amid a confluence of bad news on the domestic front. But export strength may be dwindling and progressively tougher comps are not the only factor to blame.
A record trade surplus. Overseas shipments once again topped estimates in October, driving the country's monthly trade surplus to USD84.5bn, the highest on record. The 27.1% growth in exports was propelled by robust global trade activity. China has also been getting a greater share of export orders thanks to still sluggish outputs from competing nations that have yet to return to full capacity. Early Christmas orders to beat shipment delays provided an extra boost (Exhibit 1).
However, price inflation has become the dominant driver, while unit growth has tailed off. Average export prices began to tick up in July and jumped over 10% y/y in September. Overseas buyers will be feeling the pinch of China's surging factory gate prices this Christmas. But more importantly, rising unit prices may suggest that we are now much farther along in the reopening trade in China's key export markets. Demand has shifted considerably from essential to discretionary items. That story may run out of steam soon.
Europe presents additional uncertainties in the coming months, as a spike in infections threatens to throttle its recovery. The EU was pivotal to China's export strength last month, buffering the deceleration in US orders. It remains to be seen whether a wider outbreak on the continent will be a hit to export demand or a catalyst for resurgent sales of household / electronics merchandise. What's more certain is the eventual rebound of Southeast Asia, which will chip away at orders for Chinese exports, especially if power shortages escalate in the winter months.
Price effects will likely continue to drive exports in machinery, electronics and home appliances as we approach the holiday season. That is bad news for international consumers. The average household appliance unit shipped in September had an invoice price of USD26, up almost 55% from January 2020. On a lighter note, auto exports have been a bright spot all year despite supply chain disruptions, fueled by sales of new energy vehicles. And China has Elon Musk to thank for it. 



Exhibit 1: China's Export / Import Growth and Trade Balance







Sources: General Administration of Customs, Our analysis 




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