Catching Up with Exante Data. 24 September 2021

Catching Up with Exante Data

It is good to be back in communication. Our Week In Review note has been on hiatus. We like to change things up, and are working on new projects. We continue to consider how best to communicate with our followers and show a bit of our work that we think could be helpful. If you have suggestions, you can reply on Twitter to the post with this note in it. 

Recently, we launched a publication for clients that tracks China contagion – updates on high-frequency data on Chinese real estate, PBOC policy interventions, market  signals as well as global spill-over mechanisms. Below is a table that provides an overview of Chinese and global market prices that are relevant to the Chinese real estate situation.

In the table, red cells are highlighting pockets of contagion. Around Sep 20, we had contagion to a long list of global assets. But by the end of the week many assets had recovered, and the contagion effects are now pretty isolated in assets that are more directly linked to Chinese real estate such as HY Credit indices, iron ore and specific local banks.

Table: China Contagion Summary

Founder Jens Nordvig released a series of tweet threads, which received millions of views, on Evergrande. We turned them into blog posts: 
 
Evergrande 1 (Sept 18): Focus on Chinese high yield credit moves. 
Evergrande 2 (Sept 19): Structural issues in China real estate. 
Evergrande 3 (Sept 20): Evergrande/China contagion. 
 
Jens also gave a one hour interview to Real Vision on Evergrande. He talked: what the data are indicating about contagion and explored why it has been the Hong Kong dollar, rather than the Yuan, making the biggest moves on a volatility-adjusted basis. One has to be a Real Vision subscriber to view the interview – the link is here (in the event you are one!). 

Exante Data Media

Head of Asia Pacific, Grant Wilson, writes regularly for the Australia Financial Review. His AFR page is here. Grant’s latest column is Snubbing China on trade is a strategic mistake. “Comments on Friday by Trade Minister Dan Tehan regarding China’s accession to the Indo-Pacific region trade group were a serious fumble.”
 
In our most recent Substack (Sept 13), Senior Advisor Chris Marsh looked at Bank of England balance sheet shrinkage (Part 1).  “The Bank of England announced in August the intention to undertake balance sheet shrinkage as part of the next tightening cycle. But how fast might this normalization be? Under passive balance sheet rolloff, we estimate that—once it begins—roughly 8 years will be needed to unwind the last 18 months of pandemic-related expansion. But is this fast enough for the MPC? In any case, when might the Bank incur losses on monetary income as rates rise, triggering the secretive HM Treasury indemnity? Bank Rate above 114bps would imply zero net monetary income over the life of the program, while above 170bps would deliver negative income already over the next 3 years.”

 

Exante Data © 2021. All rights reserved. Personal Data Usage Policy


This site is provided for informational purposes only.  The information included in this site should not be used as the sole basis for making a decision as to whether or not to invest in any particular security. In making an investment decision, you must rely on your own examination of the securities and the terms of the offering. You should not construe the contents of these materials as legal, tax, investment or other advice, or a recommendation to purchase or sell any particular security.

The information included in this site is based upon information reasonably available to Exante as of the date noted herein. Furthermore, the information included in this site has been obtained from sources that Exante believes to be reliable; however, these sources cannot be guaranteed as to their accuracy or completeness. Information contained in this site does not purport to be complete, nor does Exante undertake any duty to update the information set forth herein. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information contained herein, by Exante, its members, partners or employees, and no liability is accepted by such persons for the accuracy or completeness of any such information.

This site contains certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential,” “outlook,” “forecast,” “plan” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of certain investment strategy. All are subject to various factors, including, but not limited to, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting the operations of the companies identified herein, any or all of which could cause actual results to differ materially from projected results.

X
Get more information about Exante Data
X
Get Ahead With Our Updates with Our Exante Newsletter