23095052321715661284394680

Stone Mountain Capital - Alternative Investment Advisory Solutions
  • About
  • Partners
  • Team
  • Solutions
  • Mandates
  • Research
  • News
  • Contact
  • Login

​China: A Perspective On Risk And Possible Global Contagion

18/10/2016

 
Ashvin Chotai Senior Advisor Research Stone Mountain Capital LTD
Ashvin Chotai
Senior Advisor Research
Tel.: +44 7740 823049
Email: ashvin.chotai@stonemountain-capital.com
Picture
stone_mountain_capital_research_vol.35.pdf
File Size: 254 kb
File Type: pdf
Download File

STONE MOUNTAIN CAPITAL RESEARCH PERSPECTIVE VOL. 35

With 2015 GDP of US$10.87 trillion, China is the world’s second-biggest economy behind USA. Its banking assets are around three times the size of its GDP while its stock markets, even after last year’s crash, were together worth $6.27 trillion in 2015, second only to America’s. Its bond market is the third largest behind USA and Japan but growing very rapidly. China is the third largest creditor nation behind Japan and Germany. At the end of September 2016, foreign exchange reserves stood at $3.17 trillion (nearly three times that of Japan, which is in second position globally) but they have been steadily declining since hitting a peak level of nearly US$4 trillion in June 2014.


China’s spectacular growth during the last decade has not only made it the “big elephant in the room” on the world stage, but has also created major imbalances in its economy, resulting in a major risk of contagion across the globe.

For example, official estimates for non-performing loans (NPL) stood at close to $300 billion, double the level of 2014. If off-balance sheet and shadow banking loans such as trusts and peer-peer-lending (P2P) were included, NPLs would be much higher. In 2015 alone, investors have lost around $25 billion through financial fraud and nearly $670 billion of capital has left the country while China spent nearly $200 billion to prop up its stock market. These are just a selection of some worrying statistics, which have become a focus of global investors.

In the summer of 2015, a mere 2% devaluation of the Chinese yuan sent global markets tumbling. There were similar China related worries for global markets in early 2016. The slightest of concerns over slowdown in China is having major consequences for commodity exporting countries.  So, it is a big understatement to say that the prospect of a China hard landing and the impact on commodity producers and global stock, bond and currency markets would be very severe.

Global investors are currently pre-occupied with issues such as the US Presidential Elections, the nature and timing of Federal Reserve expected tightening and Brexit. China concerns appear to be on the back burner, at least for now. However, they certainly haven’t gone away and will continue to remain as one of the major concerns for investors across all asset classes, across the globe.

In this Research Perspective, we review some of the China issues that will continue to remain as major factors in driving global investment decisions across many of asset classes in the coming years.

Read More

China Corporate Credit Market: Little Concern In Financial Health For Corporate Bond Investors

25/8/2015

 
James Gellert Rapid Ratings Stone Mountain Capital
James Gellert
Chairman and CEO
Rapid Ratings International Inc.
Tel.: +1 646 233 4600
Email: information@rapidratings.com
STONE MOUNTAIN CAPITAL RESEARCH PERSPECTIVE VOL. 4 

2015 is an eventful year for China, for reasons good and bad. The acute reversal in the mainland stock markets over the summer, along with this month’s administered decline in the Yuan (Renminbi) against USD and other currencies, have unsettled many investors whose expectations for China’s performance were very different. Is there cause for alarm among fixed income investors with broad exposure to Chinese corporate credit?

Ashvin Chotai, Stone Mountain Capital's Senior Advisor in Research, wrote in research perspective Vol. 3 on August 6th 2015, that neither sharp gains nor losses in Chinese equities this year were justified by economic or company fundamentals. This observation is readily confirmed by the hard quantitative assessments of financial and operating efficiency that Rapid Ratings International has conducted on 600 mainland Chinese companies over the last 12 months.

Rapid Ratings conducts an in-depth examination of balance sheets and income statements of companies in a country coverage report. Rapid Ratings then publishes a Financial Health Rating or FHR™ on each company on a scale that runs from zero/worst to 100/best. FHRs carry no geographic biases, in contrast to ratings elsewhere. Every month Rapid Ratings collects ratings and rating changes – “deltas” - within each of 34 countries with the largest number of names in coverage, in order to compare financial health trends.

Read More

China Stock Market: Spectacular Gains Even After a 30% Correction

6/8/2015

 
Ashvin Chotai Stone Mountain Capital
Ashvin Chotai
Senior Advisor Research
Tel.: +44 7740 823049
Email: ashvin.chotai@stonemountain-capital.com


STONE MOUNTAIN CAPITAL RESEARCH PERSPECTIVE VOL. 3


One of the major current talking points among investors and economists has been the sharp declines in the price of Chinese stocks since mid June 2015.  Should these declines be regarded as a healthy correction or is there something more serious going on and has the bubble burst? What is the impact of stock market gyrations on the broader Chinese economy and will the effects spill over to global stocks, particularly of companies with significant China exposure?

Chinese stocks had been “on a tear” during the second half of 2014 and the first half of 2015.  The Shanghai Stock Index jumped by 53.3% in 2014 (with most of the gains coming in the last 5 months of the year) and by a whopping 152% in 12 months to June 12th 2015, when the index reached a closing 7 year high of 5,166. A correction after such spectacular growth was over overdue and should not have come as surprise. In early August, even after a 30% correction, the index was up by close to 70% compared to a year earlier. Even for calendar year 2015 year to date, the index is up by 15.8%.  So, we are hardly looking at a disaster scenario, especially for long-term investors.


Read More

China Autos: Growth Outlook Still Healthy Despite Changing Demand Dynamics and Some Headwinds

14/2/2014

 
Ashvin Chotai
Ashvin Chotai
Senior Advisor Research
Tel.: +44 7740 823049
Email: ashvin.chotai@stonemountain-capital.com

STONE MOUNTAIN CAPITAL RESEARCH PERSPECTIVE VOL. 2

In 2013, total vehicle demand, including passenger cars and commercial vehicles, in China stood at around 22.2 million units.  This is over a quarter of global vehicle demand and makes China’s vehicle market around 40% larger the US market. China overtook the US to become the largest market for automobiles in 2009.

Foreign automakers, although having to operate via joint ventures, control over 70% of passenger car demand and many now rely heavily on China to support their global growth ambitions. Thus, the significance of developments in China on the global auto industry is not difficult to see.

In the last decade, vehicle demand grew at a compound annual growth rate of over 20%. Major cities in the East Coast were the main growth engines initially but in recent years healthy support has also been coming from the spread of motorization in other provincial capitals and medium size cities.

Since the stimulus fueled boom in 2009 and 2010, growth rates have moderated considerably, but have still remained relatively healthy and so far the transition from high growth rates to more moderate growth rates has been relatively smooth.

Read More

China’s Auto industry: Can joint venture brands strengthen Chinese automakers?

28/11/2013

 
Ashvin Chotai Managing Director Intelligence Automotive Asia Senior Advisor Research Stone Mountain Capital
Ashvin Chotai
Senior Advisor Research
Tel.: +44 7740 823049
Email: ashvin.chotai@stonemountain-capital.com

STONE MOUNTAIN CAPITAL RESEARCH PERSPECTIVE VOL. 1

Joint Ventures will continue to shape industry structure in the world largest car auto market

China’s auto market and industry structure is renowned for its complexity and especially the existence of a large number of joint ventures between global automakers and China’s State Owned Enterprises (SOEs).  Under the current regulations, foreign automakers’ maximum stake is restricted to 50% and foreign assemblers can have a maximum of two joint ventures per vehicle category. 

The original objective of this policy was to allow controlled entry of foreign automakers into China, with the aim of enabling and encouraging transfer of technology and management know-how to Chinese partners, which are all SOEs.  

It is now over 12 years since China entered the WTO and it is surprising that China still manages to retain such restrictions on foreign ownership of vehicle assembly operations.  There has been little international pressure on this issue, largely because most of the major global automakers have already entered into very long-term joint venture agreements with their partners in China and now appear to be comfortable with the status quo.  

Read More
    ExchangeRates.org.uk
    Tweets by @stonemountainuk
    Tweets by @stonemountainch
    Tweets by @OliverFochler
    Tweets by @ChotaiAshvin
    Tweets από το χρήστη @Alex_Kyparissis

    Archives

    November 2018
    August 2018
    May 2018
    February 2018
    December 2017
    November 2017
    October 2017
    June 2017
    March 2017
    February 2017
    January 2017
    November 2016
    October 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    August 2015
    February 2014
    November 2013

    Categories

    All
    Automotive
    Bitcoin
    Blockchain
    China
    Corporate
    Credit
    Cryptocurrency
    CTA
    Direct Lending
    Emerging Market
    Equity
    ETF
    Ethereum
    Fund Of Hegde Fund
    Hedge Fund
    Index
    Joint Venture
    Middle Market
    Private Debt
    Private Equity
    Rating
    Real Estate
    Risk Premia
    SME
    State Owned Enterprise
    Stocks
    UCITS
    VIX
    Volatility
    VSTOXX

    RSS Feed

Stone Mountain Capital LTD is registered (FRN: 729609) as Appointed Representative with the Financial Conduct Authority (‘FCA’) in the United Kingdom.
 
The website content is neither an offer to sell nor a solicitation of an offer to buy an interest in any investment or advisory service by Stone Mountain Capital LTD and should be read with the Disclaimer.
 
© 2012 - 2019 Stone Mountain Capital LTD. All rights reserved.
Contact  
Privacy Policy
Anti-Bribery Policy
UK Stewardship Code
Disclaimer