Link Securities | China’s General Administration of Customs reported early this morning that the September trade surplus rose to $66.67 billion, up from a consensus expected reading for a $45 billion surplus, and up from a figure of $53.3 billion in August. Dollar exports rose by 28.1% y-o-y, against a consensus reading of 21.5%, and compared with a 25.6% increase in August. Meanwhile, imports rose 17.6 per cent year-on-year, compared…
Intermoney | A slightly higher opening (Eurostoxx futures +0.3%) after yesterday’s 2% falls in the main American and European indices, with the Ibex registering a better relative performance, buoyed by the tourism and defensive sectors. This environment of greater risk aversion and fears about economic growth also translated into additional moderation of IRRs. In the case of Europe, this was also supported by the statements from Villeroy, the governor of…
China’s country’s largest real estate company, Evergrande, which is on the verge of bankruptcy with more than $300 billion in debt (about 2% of China’s GDP), has announced that it will not be able to pay interest next week. Weak home sales, especially in the last year, have put it in this cash-strapped position. Therefore, the situation is becoming increasingly tense. The group is described by Beijing as a “grey rhinoceros”, i.e., a large company with an alarming debt load representing a systemic financial risk.
Portocolom AV | China currently dominates the solar industry, with Chinese companies controlling around 80% of the global solar supply chain, from raw material refining to panel production and assembly. In 2020, 45% of the global supply of poly silicon, the key refined material that comprises 95% of solar panels, came from China’s Xinjiang Uyghur Autonomous Region. The governments of the US, UK, Canada and the Netherlands have declared that China has committed genocide and crimes against humanity in its treatment of Uighurs and other Muslim-majority peoples in Xinjiang.
Bank lending rose by RMB 1.28 trillion, well below consensus expectations of RMB 1.56 trillion, while aggregate financing to the real economy (AFRE), which includes loans and bonds, recorded net growth of RMB 1.85 trillion (against expectations of RMB 2.25 trillion). As a result, China’s M2 money supply declined from +9.4% y-o-y in March to +8.1% y-o-y in April. It has returned to pre-Covid levels in 2018/19.
JINYUE DONG & LE XIA (BBVA Research) | The PBoC started to exit the above easing measures in May 2020 when the Covid-19 pandemic got controlled in mainland China. Historically, the exit of easing monetary measures in the post-crisis time has always been a global challenge to central banks. China is not an exception in this respect. In February 2021, the normalization progress in China led to the gyration of the interbank interest rate in February 2021, just before the Chinese Lunar New Year as the investors’ fear of the authorities’ fast tightening climbed to a new high.
European Views | A growing number of EU countries are voicing their concerns over Beijing’s increasing leverage as Chinese companies gain footholds in a number of essential European sectors. The Finnish intelligence community recently raised particular concerns about Huawei’s involvement in 5G networks and claimed that China & Russia are “trying to get hold of Finland’s critical infrastructure”. Dutch intelligence services, meanwhile, released a report last week arguing that Chinese cyber-espionage might pose an “imminent threat” to Dutch national security interests, particularly in key sectors including banking, energy and infrastructure.
Repsol has licensed its technology for propylene oxide (PO) and styrene monomer (SM) and polyols so that a 200,000 tons/year PO and 450,000 tons/year SM plant can be built, and two plants with an aggregate production capacity of 125,000 tons/year of flexible polyether polyols (PPG) and polymeric polyols (POP). This agreement is in addition to the three previous technology licensing agreements reached by Repsol with Chinese companies since 2013.
Intermoney | China surpassed its economic growth previous to the health crisis. Specifically it recorded 6.5% per year in Q4’20, when in the same period in 2019 it grew by 6%. Thus guaranteeing China’s rapid recovery, while also highlighting the country’s margin for facing up to any temporary turbulence linked to the resurgence of COVID-19. Furthermore, China would encourage the population to continue working to limit the number of people returning to their places of origin during the New Year celebrations.
Jinyoue Dong & Betty Huang (BBVA Research) | Vaccination, accommodative monetary policy with “no sharp turnaround”, possible alleviation of China-US tension under Biden’s presidency and deflationary environment give Chinese authorities a chance for a short respite in 2021.