https://www.scmp.com/rss/324323/feed Andrew Brown is a partner for macro and strategy at ShoreVest Capital Partners en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Under Zhu Rongji, China decided to go international with its equity offerings in the early 2000’s, starting a long-term developmental process of internationalising their balance sheets and opening up to global capital markets. Importantly, it also began a process of China’s under-managed state-owned enterprises beginning to adopt international discipline. By this I mean pre-IPO restructurings, experiencing underwriting and due diligence proceedings, meeting exchange listing requirements,... https://www.scmp.com/business/investor-relations/article/2108325/chinas-corporate-debt-market-will-soak-us15-trillion-it?utm_source=rss_feed https://www.scmp.com/business/investor-relations/article/2108325/chinas-corporate-debt-market-will-soak-us15-trillion-it?utm_source=rss_feed Sat, 26 Aug 2017 00:31:53 +0000 In a broad sense, economies globally are undergoing a rolling process of deflating their credit excesses. During this process in almost every major economy, bubbles tend to form and spill over from one segment to another, in an attempt to keep growth percolating. We believe China will be no different. About 45 per cent of China’s gross domestic product (GDP) is in the industrial economy, which after a credit-fueled growth, is now suffering from debt-laden excess capacity. This is the current... https://www.scmp.com/business/money/money-news/article/2105445/will-chinas-consumer-market-become-next-credit-bubble?utm_source=rss_feed https://www.scmp.com/business/money/money-news/article/2105445/will-chinas-consumer-market-become-next-credit-bubble?utm_source=rss_feed Fri, 04 Aug 2017 08:32:14 +0000 In previous columns, we estimated the excess debt in the Chinese economy to be approximately US$3.1 trillion and still growing. 
This is of course an enormous figure, and represents the largest non performing loan aggregation in the world by far. It obviously constitutes a considerable overhang on the Chinese economy. Therefore, the regulatory response must be equally profound in their attempt to orchestrate an orderly deflating of this credit excess. The Chinese authorities have already started... https://www.scmp.com/business/china-business/article/2102704/chinas-lehman-moment-could-begin-november-because-compliance?utm_source=rss_feed https://www.scmp.com/business/china-business/article/2102704/chinas-lehman-moment-could-begin-november-because-compliance?utm_source=rss_feed Fri, 14 Jul 2017 11:15:00 +0000 Chinese authorities continue to get more serious in addressing unproductive debt in the economy and banks’ understatement of bad debts. The recent appointment of Guo Shuqing as the new head of the China Banking Regulatory Commission (CBRC) is a clear sign of Beijing’s intent on accelerating non-performing loan (NPL) resolutions and unwinding excess debt. Guo hasn’t wasted any time. In Circular 46 issued last month, the CBRC stepped-up its enforcement of prohibited accounting practises that banks... https://www.scmp.com/business/article/2096568/china-has-bold-plan-tackle-bad-bank-loans-and-its-first-deadline-closer-you?utm_source=rss_feed https://www.scmp.com/business/article/2096568/china-has-bold-plan-tackle-bad-bank-loans-and-its-first-deadline-closer-you?utm_source=rss_feed Fri, 02 Jun 2017 00:31:47 +0000 This past Wednesday, the People’s Bank of China and the Hong Kong Monetary Authority announced a joint cooperation to launch “Bond Connect”, with no exact timing given. Bond Connect is the formalisation of allowing two-way bond investment, trading, custody, and settlement. The announcement says that the “Northbound Connect” will launch first (with no investment quota), with “Southbound Connect” to follow in due course. While long flagged by authorities on both sides, this announcement is... https://www.scmp.com/business/article/2095002/four-reasons-china-opening-its-bond-market-world?utm_source=rss_feed https://www.scmp.com/business/article/2095002/four-reasons-china-opening-its-bond-market-world?utm_source=rss_feed Sat, 20 May 2017 03:00:58 +0000 China’s authorities are committed to orchestrating an orderly unwind of US$3 trillion worth of excess credit and the resultant distressed debt on banks’ balance sheets by employing a multi-pronged, market-based approach. In our view, there are essentially three alternative paths for resolution. Firstly, let’s consider a government bailout. Today’s situation is very different from the period 2002 to 2004 when Beijing launched an earlier government bailout of the state-owned banking system. Many... https://www.scmp.com/business/companies/article/2093137/why-china-can-deflate-worlds-largest-credit-bubble-orderly?utm_source=rss_feed https://www.scmp.com/business/companies/article/2093137/why-china-can-deflate-worlds-largest-credit-bubble-orderly?utm_source=rss_feed Fri, 05 May 2017 08:13:46 +0000 From a global macroeconomic perspective, we encourage readers to consider that the world is experiencing an extended, rolling process of deflating its credit excesses. It is now simply China’s turn. For context, Japan started deflating their credit bubble in the early 1990s, and has now experienced more than 20 years of deflation and very little growth since. The US began its process in 2008, and after eight years has only recently been showing signs of sustainable recovery. The euro zone... https://www.scmp.com/business/global-economy/article/2089577/can-worlds-largest-credit-excess-be-unwound-luckily-beijing?utm_source=rss_feed https://www.scmp.com/business/global-economy/article/2089577/can-worlds-largest-credit-excess-be-unwound-luckily-beijing?utm_source=rss_feed Fri, 21 Apr 2017 08:58:35 +0000