Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
3Activity
0 of .
Results for:
No results containing your search query
P. 1
Phat Dragons Weekly Chronicle of the Chinese Economy (28 August 2013)

Phat Dragons Weekly Chronicle of the Chinese Economy (28 August 2013)

Ratings: (0)|Views: 344|Likes:
Published by leithvanonselen

More info:

Published by: leithvanonselen on Aug 28, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

03/29/2015

pdf

text

original

 
1
a weekly chronicle of the Chinese economy 
Phat dragon
# 178
Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based arereasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
Chinese exceptionalism. That phrase, and its variants, arethrown around in any number for fora, occasionally correctly.
Phat Dragon
himself is not averse to describing certainaspects of China’s historical journey as
sui generis
. The recentcapital withdrawal from emerging Asia, dating to the initial QEtapering tremors back in Q2, may be yet another example ofthe Chinese experience developing along a unique trajectorydespite a common external shock being visited upon the region.Between April 1 and yesterday, spot USD/CNY has moved inthe CNY’s favour, whereas the average emerging East Asianexchange rate has depreciated sharply. The average BRICdepreciation, excluding China, has been 12%. On the surface,the performance of the CNY has been remarkable. Or is it?Those caught up in the sentiment of the sharp move in the NDFcurve through June, when substantially CNY depreciation overthe coming year was priced in, with global investors agog atthe difficulties being faced by the interbank funding market, willpresumably see it as so. But wait ...
Phat Dragon
noted thatthrough July those same investors seemed extremely reluctantto give up on their NDF positions despite SHIBOR receding tonormal levels early in the month. The grudging acceptance thata financial catastrophe was not imminent has slowly filteredthrough to more realistic NDF pricing; and spot performancehas done nothing to contradict that move. This is a timelyreminder that currencies backed by large external surpluses(the flow) and considerable net international asset positions (thestock) tend to appreciate in the midst of market squalls. Thosecharacteristics are scarce. And if home monetary policy is beingtightened as well? Forget about it.
Turning to other matters,
Phat Dragon
draws upon a widerange of data sources to piece together the complex mosaicof the Chinese economy. Outside of the regulation indicators,China’s logistics sector is an invaluable mirror on the pulse ofboth domestic and external demand. Premier Li’s predilectionfor such proxies was made known some time ago, with railfreight joining electricity output and bank loans in his favouredtroika.
Phat Dragon
is with the Premier in spirit on this issue.However, rail cargoes alone are not as analytically useful astotal terrestrial freight, especially when one considers that9 tonnes out of every 10 moved on land goes by road. Totalterrestrial freight was 9.9% above year ago levels in July, a slightadvance on the pace seen across the first half of the year. Thatis a little faster than the rate of nominal GDP growth reported inthe first half; but quite consistent with the official data for July.
The pace set by terrestrial freight is presently being outdone byaquatic throughput, which accelerated to 18.8%yr in July, a heftyincrease from the first half average of 7.1%. A material portionof that gain is due to the flattering comparison with July 2012- a point
Phat Dragon
has belaboured in his recently analysiesof the monthly data flow. Air freight volumes though are laggingwell behind both land and water logistics, being up just 2.7%yr.That rate is broadly representative of the recent experience ofother exporters of sophisticated manufactures across emergingAsia. Weaker relative outcomes for air freight also jibes wellwith the observed strength in raw materials imports of latevis-a-vis the subdued state of the inward leg of the processingand assembly trade. Weak absolute outcomes for air freight areindicative of sluggish global consumer durables demand andmeek ICT hardware trade, although recent survey data in theadvanced world implies some modest upside in the short term.
28 August 2013
Westpac Institutional Banking Group Economic Research economics@westpac.com.au www.westpac.com.au
Logistics proxies: volume
-20-10010203040-20-10010203040 Jan-01Jan-03Jan-05Jan-07Jan-09Jan-11Jan-13Aquatic freight Terrestrial freight%yr%yr
Sources: CEIC, Westpac
Stats of the week: China is home to 394 mammalspecies, 75 of whom are classed as endangered.
Selected currencies against the USD
-18-15-12-9-6-3036-18-15-12-9-6-3036
EURCNYHKDKRWTWDSGDJPYMYRPHPTHBIDRAUDBRLINR
%chg%chg
Source: Bloomberg, Westpac.
% change between April 1 and Aug 27, 2013
Emerging Asia (ex HK, China and India) average
Overnight SHIBOR & the 12mth CNY NDF
024681012140.51.01.52.02.53.0Sep-12Nov-12Jan-13Mar-13May-13Jul-13Sep-13%pa%chgCNY NDF 12mth (lhs)Overnight SHIBOR (rhs)
Sources: WestpacEconomics, CEIC.
Foreign investorsreluctant to let go,despite SHIBORsettling down.
Air freight volumes: China and the NIEs
-30-15015304560-30-15015304560 Jun-04Jun-06Jun-08Jun-10Jun-12ChinaNIEs%yr%yr
Sources: CEIC, Westpac.Data smoothed and LNY attached.
 
Disclaimer
Things you should know:
Each time someone visits our site, data is captured so that we can accurately evaluate the quality of our content and makeimprovements for you. We may at times use technology to capture data about you to help us to better understand you and your needs, includingpotentially for the purposes of assessing your individual reading habits and interests to allow us to provide suggestions regarding other readingmaterial which may be suitable for you.If you are located in Australia, this material and access to this website is provided to you solely for your own use and in your own capacity as awholesale client of Westpac Institutional Bank being a division of Westpac Banking Corporation ABN 33 007 457 141 AFSL 233714 (‘Westpac’). If youare located outside of Australia, this material and access to this website is provided to you as outlined below.This material and this website contain general commentary only and does not constitute investment advice. Certain types of transactions, includingthose involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that youseek your own independent legal or financial advice before proceeding with any investment decision. This information has been prepared withouttaking account of your objectives, financial situation or needs. This material and this website may contain material provided by third parties. Whilesuch material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy orcompleteness of any such material. Although we have made every effort to ensure the information is free from error, none of Westpac or its relatedentities warrants the accuracy, adequacy or completeness of the information, or otherwise endorses it in any way. Except where contrary to law,Westpac and its related entities intend by this notice to exclude liability for the information. The information is subject to change without notice andnone of Westpac or its related entities is under any obligation to update the information or correct any inaccuracy which may become apparent ata later date. The information contained in this material and this website does not constitute an offer, a solicitation of an offer, or an inducement tosubscribe for, purchase or sell any financial instrument or to enter a legally binding contract. Past performance is not a reliable indicator of futureperformance. The forecasts given in this material and this website are predictive in character. Whilst every effort has been taken to ensure that theassumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risksand uncertainties. The ultimate outcomes may differ substantially from these forecasts.Transactions involving carbon give rise to substantial risk (including regulatory risk) and are not suitable for all investors. We recommend that you seekyour own independent legal or financial advice before proceeding with any investment decision. This information has been prepared without takingaccount of your objectives, financial situation or needs. Statements setting out a concise description of the characteristics of carbon units, Australiancarbon credit units and eligible international emissions units (respectively) are available at www.cleanenergyregulator.gov.au as mentioned in section202 of the Clean Energy Act 2011, section 162 of the Carbon Credits (Carbon Farming Initiative) Act 2011 and section 61 of the Australian NationalRegistry of Emissions Units Act 2011. You should consider each such statement in deciding whether to acquire, or to continue to hold, any carbonunit, Australian carbon credit unit or eligible international emissions unit.
Additional information if you are located outside of AustraliaNew Zealand:
The current disclosure statement for the New Zealand division of Westpac Banking Corporation ABN 33 007 457 141 or WestpacNew Zealand Limited can be obtained at the internet address www.westpac.co.nz. Westpac Institutional Bank products and services are providedby either Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (New Zealand division) or Westpac New Zealand Limited. Forfurther information please refer to the Product Disclosure Statement (available from your Relationship Manager) for any product for which a ProductDisclosure Statement is required, or applicable customer agreement. Download the Westpac NZ QFE Group Financial Advisers Act 2008 DisclosureStatement at www.westpac.co.nz.
China, Hong Kong, Singapore and India:
Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the MonetaryAuthority of Singapore. Westpac Hong Kong Branch holds a banking license and is subject to supervision by the Hong Kong Monetary Authority.Westpac Hong Kong branch also holds a license issued by the Hong Kong Securities and Futures Commission (SFC) for Type 1 and Type 4 regulatedactivity. Westpac Shanghai and Beijing Branches hold banking licenses and are subject to supervision by the China Banking Regulatory Commission(CBRC). Westpac Mumbai Branch holds a banking license from Reserve Bank of India (RBI) and subject to regulation and supervision by the RBI.
U.K.:
Westpac Banking Corporation is registered in England as a branch (branch number BR000106), and is authorised and regulated by theAustralian Prudential Regulatory Authority in Australia. WBC is authorised in the United Kingdom by the Prudential Regulation Authority. WBC issubject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority in the United Kingdom. Detailsabout the extent of our regulation by the Prudential Regulation Authority are available from us on request. Westpac Europe Limited is a companyregistered in England (number 05660023) and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authorityand the Prudential Regulation Authority. This material and this website and any information contained therein is directed at a) persons who haveprofessional experience in matters relating to investments falling within Article 19(1) of the Financial Services Act 2000 (Financial Promotion) Order2005 or (b) high net worth entities, and other persons to whom it may otherwise be lawfully communicated, falling within Article 49(1) of the Order(all such persons together being referred to as “relevant persons”). The investments to which this material and this website relates are only availableto and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such investments will be engaged in only with, relevant persons.Any person who is not a relevant person should not act or rely upon this material and this website or any of its contents. In the same way, theinformation contained in this material and this website is intended for “eligible counterparties” and “professional clients” as defined by the rules of theFinancial Services Authority and is not intended for “retail clients”. With this in mind, Westpac expressly prohibits you from passing on the informationin this material and this website to any third party. In particular this material and this website, website content and, in each case, any copies thereofmay not be taken, transmitted or distributed, directly or indirectly into any restricted jurisdiction.
U.S.:
Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency.Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliatedwith, a Futures Commission Merchant registered with the US CFTC. Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac,is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry RegulatoryAuthority (‘FINRA’).

Activity (3)

You've already reviewed this. Edit your review.
1 thousand reads
1 hundred reads

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->