不動産
Real estate activity in general, and property construction volumes in particular, are critical to our thesis of an ongoing growth slowdown in China. The basis is that construction volumes on the mainland have a considerable impact on industrial activity both within and outside China. On the structural front, housing demand is facing major headwinds: Genuine pent-up demand for housing has diminished. Most Chinese households already own at least one property. Based on a recent survey conducted by The Economic Daily,1 nearly 97% of households surveyed own at least one residential property. Last year’s China Household Finance Survey (CHFS), conducted by Southwestern University of Finance and Economics of China, showed about 68% of new homes sold in China’s urban areas in the first quarter of 2018 were purchased for the purpose of investment. In addition, the living area per capita in China’s urban areas has risen to 40 square meters as of the end of last year – larger than in South Korea and Japan. Other structural impediments include low affordability, slowing rural-to-urban migration, demographic changes and the promotion of the housing rental market. The government has been repeatedly stressing that China will not use the property market as a short-term economic growth-booster this time. The authorities will also continue to prevent speculative housing demand. Between late 2015 and 2017, the People's Bank of China undertook outright monetization of excess housing inventories via the Pledged Supplementary Lending (PSL) program. So far, even though the Chinese economy has already slowed considerably, the government has not injected much stimulus into the property market. On the contrary, the government has drastically reduced the number of slum-reconstruction units as well as its PSL injection this year. This year, the government has also started a new long-term project of renovating residential buildings built in 2000 or earlier. The projects involved include adding parking lots, elevators, fiber cable installments, electricity/gas line improvements, and so on. This renovation program will likely delay property purchases from those owners who were considering purchasing new properties instead of living in the older residential buildings. Chart II-1Property Sales In China: A Sustainable Recovery? From a cyclical perspective (6-12 months), falling home prices and relatively tight financing for property developers will likely prevent a recovery in construction activity: First, Chart II-1 shows there has recently been a pickup in residential property sales. Our research reveals that this has been the result of aggressive promotion strategies – price reductions – implemented by many real estate developers. Among the promotions being offered by many developers are “buy one property, get the second one at half price,” “buy a house and get a car for free,” or “buy a house and get free furniture and decorations.” Local governments have been “discouraging” outright property price declines. Yet, it seems they have allowed implicit price reductions to take place. In cases where outright price cuts cannot be avoided, the authorities try to limit them. Earlier this month, the government of Maanshan, a third-tier city in the Anhui province, released a rule instructing property developers not to lower prices by more than 10%. The outlook for China’s property market and construction activity is downbeat. As a result, official statistics on new housing prices do not truly reflect price pressures in the marketplace. Official statistics show new housing prices are rising at 9% since last year. Nevertheless, many 1st- and 2nd- tier cities are showing price declines in their secondhand residential property markets (Chart II-2). Chart II-2China: Secondary Market Property Prices Are Weak Chart II-3Chinese Property Developers: Massive Pre-Sold Homes, But Lack Of Funding To Complete Construction All in all, it seems that falling home prices have begun to spread from 1st tier cities to some 2nd- and 3rd-tier cities. The number of cities reporting declines in residential home prices is on the rise. Second, in theory, falling property prices should discourage new starts and new construction. Falling prices signal that supply is exceeding demand, with producers typically responding by curtailing output. This holds true for any industry. However, the intricacies of property developers in China may be different. Chart II-4Building Construction Data Is A Broader Measure Than Commodity Buildings Specifically, property developers have been pre-selling aggressively since 2017 while slowing their completion process due to lack of financing (Chart II-3). Such financial constraints arose due to their rapid expansion in the past 10 years. Having already incurred enormous amounts of leverage, they have resorted to pre-sales as another source of funding. Property developers are currently under pressure to deliver those units that were pre sold about two years ago. Will they be able to secure new funding and ramp up construction? Or will they default or delay delivery of houses? It may well be different for each developer. The ones with strong balance sheets and access to financing will build and deliver. The weakest ones will default, while the average ones will likely delay delivery. Hence, it is difficult to gauge construction trends in the next six months in the residential property market. Even so, it is unlikely to be very strong given the industry is highly fragmented, and many small and medium and even some large developers are financially weak. Finally, there is a large gap between the two construction activity datasets – both published by the National Bureau of Statistics. These datasets are referred to as “commodity buildings” and “building construction” (Chart II-4). “Commodity buildings” – i.e., those developed by real estate developers (the equivalent of homebuilders in the US), are only a subset of “building construction.” The “building construction” dataset is more comprehensive. It includes not only “commodity buildings” but also buildings built by non-real estate developers. For example, companies, universities, and various organizations that can construct both residential and non-residential buildings for their own use. Both datasets include residential and non-residential buildings. From a cyclical perspective (6-12 months), falling home prices and relatively tight financing for property developers will likely prevent a recovery in construction activity. Chart II-5 illustrates that “building construction” floor area started, under construction and completed are all shrinking. They are much weaker than floor area started, under construction and completed of “commodity buildings.” Chart II-5Building Construction Is In Recession Chart II-6Falling Construction-Related Commodities Prices Reflect The Weakness In China Construction Activity The take-away from these datasets is as follows: Construction activity in China goes beyond property developers and “commodity buildings” statistics do not always paint the complete picture. Companies and organizations have dramatically curtailed their construction activity. Combined with tight financing conditions for real estate developers, this heralds a downbeat outlook for construction activity. Bottom Line: While short-term fluctuations in construction activity are impossible to gauge in China, the cyclical outlook remains negative. The current round of stimulus has avoided the property market, and real estate bubble excesses have not yet been wrung out. This is why we remain negative on China’s construction outlook and continue to recommend underweighting property developers relative to both the A-share and investable equity indexes. Falling steel, iron ore and industrial commodities prices confirm that construction activity in China remains weak (Chart II-6). Ellen JingYuan He Associate Vice President ellenj@bcaresearch.com Footnotes 1 The Economic Daily, administratively managed by the Ministry of Communication, is one of the most influential and authoritative newspapers in China. It is an official outlet for the government to publicize its economic policies.
Highlights Analysis on the Chinese property market is available below. In the Philippines, domestic demand is set to accelerate at the hands of the government’s fiscal boost. The current account deficit will widen and the peso and local bonds will likely sell-off. This warrants an underweight stance in this interest rate-sensitive bourse. A new trade: Pay 2-year swap rates. The outlook for China’s property market and construction activity is downbeat. Financial market plays leveraged to mainland construction activity remain at risk. The Philippines: The Cycle Is Turning The relative performance of Philippine equities against the EM benchmark is moving inversely to the direction of relative (Philippines minus EM) local bond yields (Chart I-1). When local Philippine bond yields drop versus those of other EMs, this bourse outperforms, and vice versa. Likewise, Philippine share prices in absolute terms exhibit a negative relationship with local bond yields (Chart I-2). The rationale behind this high sensitivity in share prices to local interest rates is the large presence of banks and property stocks in the Philippines' bourse. Banks account for 20% and real estate stocks another 21% of the local stock exchange. These sectors benefit in a falling interest rate environment and suffer during periods of rising rates. Chart I-1Philippines Vs. EM: Relative Stock Prices And Bond Yields Chart I-2Philippine Stocks Are Inversely Correlated To Domestic Bond Yields Our underweight position in Philippine equities has not played out because the economy has slowed much more than we had expected, which has also coincided with collapsing US Treasury bond yields. Consequently, Philippine local bond yields have plummeted, supporting the stock market’s absolute and relative performance. Chart I-3Philippine Growth Slowed Due To A Slump In Government Spending Chart I-4Negative Fiscal & Credit Impulse Stabilized The Current Account Deficit The growth rate of the Philippines has decelerated markedly due to sharp slowdowns in both government spending and bank loan growth (Chart I-3). In fact, the combined bank loan and fiscal spending impulse has plunged, leading to a major slowdown in domestic demand, which in turn has stabilized the current account (Chart I-4). The latter effect has supported the currency and allowed the central bank to cut rates. A budget deadlock on a number of items delayed the approval of the 2019 budget, causing government spending to plunge in the first half of 2019. In short, it was unintended fiscal tightening that has wrong-footed our view on the direction of the macro cycle, and consequently Philippine financial markets. Government spending has been instrumental in driving fixed capital formation since President Rodrigo Duterte came to power in May 2016. Philippine local bond yields have plummeted, supporting the stock market’s absolute and relative performance. Going forward, the macro cycle is set to reverse: Chart I-5Philippines: Signs Of A Growth Rebound Government expenditure will rise substantially – infrastructure spending in particular – lifting imports. The 2019 budget was approved back in April, and the House of Representatives has given the green light to extend the shelf-life of the current 2019 budget. Moreover, the fiscal 2020 budget, now approved by Duterte, entails 12% nominal growth in government expenditures in general and 14% growth in capital/infrastructure spending in particular. Duterte will oversee 100 flagship infrastructure projects estimated to cost 4.3 trillion Philippine pesos, or 24% of GDP. More than half of these projects are either ongoing or will commence construction in the next six to eight months. The larger infrastructure expenditure will encourage bank lending. Overall, domestic demand will revive considerably, causing the current account deficit to widen. Importantly, the expected fiscal boost will come on top of already strong consumer spending. The marginal propensity to spend among households and companies is already improving, confirming domestic growth acceleration (Chart I-5, top panel). In particular, both vehicle and machinery sales are recovering (Chart I-5, middle panel). Narrow and broad money impulses have bottomed (Chart I-5, bottom panel). Stronger imports amid still-depressed exports due to sluggish global demand will lead to a widening of the current account deficit. We expect the peso to resume its depreciation. Renewed currency weakness and a domestic demand revival will put a floor under inflation. The central bank is headed by Governor Benjamin Diokno, the former Budget Secretary and an associate of populist President Duterte. The odds are that the central bank will not hike interest rates in the face of a rising current account deficit and modestly rising inflation. This will reinforce currency depreciation. Finally, domestic bond yields are set to rise. A widening fiscal deficit has historically coincided with higher domestic bond yields (Chart I-6). Odds are it will not be different this time. Besides, Philippine banks have been relentlessly purchasing government bonds because credit demand from companies has been sluggish (Chart I-7). As private credit demand begins to recover and banks accelerate their loan origination, they will become net sellers – or will at least ease their pace of government bond purchases – pushing yields higher. Chart I-6Rising Fiscal Deficit Is Bad News For Bonds Chart I-7Philippine Commercial Banks Have Been Purchasing Government Bonds En Masse Bottom Line: Unintended fiscal tightening has slowed domestic demand, narrowed the current account deficit, supported the currency and induced a drop in local bond yields. This has allowed the Philippines’ interest rate-sensitive bourse to outperform the overall EM equity index. Going forward, the macro cycle is set to reverse. This cycle is about to reverse due to strong fiscal expansion: Domestic demand and imports will grow briskly, and the current account deficit will widen considerably. Widening twin deficits will lead to material currency depreciation and higher domestic bond yields. Investment Recommendations Continue shorting the Philippine peso versus the US dollar. 2-year swap rates are 48 basis points below the policy rate (Chart I-8). The market will price out rate cuts as the business cycle recovers and the currency depreciates. We recommend a new trade: pay 2-year swap rates. Dedicated EM fixed-income investors should underweight the Philippines in their EM domestic currency bonds and sovereign credit portfolios. Chart I-8The Market Is Expecting Rate Cuts Chart I-9Philippine Equity Market Is Not Cheap Does an upcoming growth revival warrant an overweight stance in Philippine stocks within an EM equity portfolio? As shown in Charts I-1 and I-2, this equity market is more sensitive to interest rates than growth. The growth deceleration did not prevent this stock market from outperforming its EM peers. Hence, higher local bond yields amid renewed currency depreciation will likely lead to a period of underperformance. Finally, Philippine stocks are not cheap in absolute terms or relative to the EM benchmark (Chart I-9). Hence, they will not respond well to rising interest rates. Chart I-10Philippine Property Stocks Will Suffer As Interest Rates Rise Within this bourse, underweight/short property stocks. These stocks are the most vulnerable to rising bond yields (Chart I-10). The key risks to our strategy are lower global bond yields and continuous flows of foreign capital into EM assets in general, and local bonds in particular. Ayman Kawtharani Editor/Strategist ayman@bcaresearch.com Arthur Budaghyan Chief Emerging Markets Strategist arthurb@bcaresearch.com China: Making Sense Of The Property Market Real estate activity in general, and property construction volumes in particular, are critical to our thesis of an ongoing growth slowdown in China. The basis is that construction volumes on the mainland have a considerable impact on industrial activity both within and outside China. On the structural front, housing demand is facing major headwinds: Genuine pent-up demand for housing has diminished. Most Chinese households already own at least one property. Based on a recent survey conducted by The Economic Daily,1 nearly 97% of households surveyed own at least one residential property. Last year’s China Household Finance Survey (CHFS), conducted by Southwestern University of Finance and Economics of China, showed about 68% of new homes sold in China’s urban areas in the first quarter of 2018 were purchased for the purpose of investment. In addition, the living area per capita in China’s urban areas has risen to 40 square meters as of the end of last year – larger than in South Korea and Japan. Other structural impediments include low affordability, slowing rural-to-urban migration, demographic changes and the promotion of the housing rental market. The government has been repeatedly stressing that China will not use the property market as a short-term economic growth-booster this time. The authorities will also continue to prevent speculative housing demand. Between late 2015 and 2017, the People's Bank of China undertook outright monetization of excess housing inventories via the Pledged Supplementary Lending (PSL) program. So far, even though the Chinese economy has already slowed considerably, the government has not injected much stimulus into the property market. On the contrary, the government has drastically reduced the number of slum-reconstruction units as well as its PSL injection this year. This year, the government has also started a new long-term project of renovating residential buildings built in 2000 or earlier. The projects involved include adding parking lots, elevators, fiber cable installments, electricity/gas line improvements, and so on. This renovation program will likely delay property purchases from those owners who were considering purchasing new properties instead of living in the older residential buildings. Chart II-1Property Sales In China: A Sustainable Recovery? From a cyclical perspective (6-12 months), falling home prices and relatively tight financing for property developers will likely prevent a recovery in construction activity: First, Chart II-1 shows there has recently been a pickup in residential property sales. Our research reveals that this has been the result of aggressive promotion strategies – price reductions – implemented by many real estate developers. Among the promotions being offered by many developers are “buy one property, get the second one at half price,” “buy a house and get a car for free,” or “buy a house and get free furniture and decorations.” Local governments have been “discouraging” outright property price declines. Yet, it seems they have allowed implicit price reductions to take place. In cases where outright price cuts cannot be avoided, the authorities try to limit them. Earlier this month, the government of Maanshan, a third-tier city in the Anhui province, released a rule instructing property developers not to lower prices by more than 10%. The outlook for China’s property market and construction activity is downbeat. As a result, official statistics on new housing prices do not truly reflect price pressures in the marketplace. Official statistics show new housing prices are rising at 9% since last year. Nevertheless, many 1st- and 2nd- tier cities are showing price declines in their secondhand residential property markets (Chart II-2). Chart II-2China: Secondary Market Property Prices Are Weak Chart II-3Chinese Property Developers: Massive Pre-Sold Homes, But Lack Of Funding To Complete Construction All in all, it seems that falling home prices have begun to spread from 1st tier cities to some 2nd- and 3rd-tier cities. The number of cities reporting declines in residential home prices is on the rise. Second, in theory, falling property prices should discourage new starts and new construction. Falling prices signal that supply is exceeding demand, with producers typically responding by curtailing output. This holds true for any industry. However, the intricacies of property developers in China may be different. Chart II-4Building Construction Data Is A Broader Measure Than Commodity Buildings Specifically, property developers have been pre-selling aggressively since 2017 while slowing their completion process due to lack of financing (Chart II-3). Such financial constraints arose due to their rapid expansion in the past 10 years. Having already incurred enormous amounts of leverage, they have resorted to pre-sales as another source of funding. Property developers are currently under pressure to deliver those units that were pre sold about two years ago. Will they be able to secure new funding and ramp up construction? Or will they default or delay delivery of houses? It may well be different for each developer. The ones with strong balance sheets and access to financing will build and deliver. The weakest ones will default, while the average ones will likely delay delivery. Hence, it is difficult to gauge construction trends in the next six months in the residential property market. Even so, it is unlikely to be very strong given the industry is highly fragmented, and many small and medium and even some large developers are financially weak. Finally, there is a large gap between the two construction activity datasets – both published by the National Bureau of Statistics. These datasets are referred to as “commodity buildings” and “building construction” (Chart II-4). “Commodity buildings” – i.e., those developed by real estate developers (the equivalent of homebuilders in the US), are only a subset of “building construction.” The “building construction” dataset is more comprehensive. It includes not only “commodity buildings” but also buildings built by non-real estate developers. For example, companies, universities, and various organizations that can construct both residential and non-residential buildings for their own use. Both datasets include residential and non-residential buildings. From a cyclical perspective (6-12 months), falling home prices and relatively tight financing for property developers will likely prevent a recovery in construction activity. Chart II-5 illustrates that “building construction” floor area started, under construction and completed are all shrinking. They are much weaker than floor area started, under construction and completed of “commodity buildings.” Chart II-5Building Construction Is In Recession Chart II-6Falling Construction-Related Commodities Prices Reflect The Weakness In China Construction Activity The take-away from these datasets is as follows: Construction activity in China goes beyond property developers and “commodity buildings” statistics do not always paint the complete picture. Companies and organizations have dramatically curtailed their construction activity. Combined with tight financing conditions for real estate developers, this heralds a downbeat outlook for construction activity. Bottom Line: While short-term fluctuations in construction activity are impossible to gauge in China, the cyclical outlook remains negative. The current round of stimulus has avoided the property market, and real estate bubble excesses have not yet been wrung out. This is why we remain negative on China’s construction outlook and continue to recommend underweighting property developers relative to both the A-share and investable equity indexes. Falling steel, iron ore and industrial commodities prices confirm that construction activity in China remains weak (Chart II-6). Ellen JingYuan He Associate Vice President ellenj@bcaresearch.com Footnotes 1 The Economic Daily, administratively managed by the Ministry of Communication, is one of the most influential and authoritative newspapers in China. It is an official outlet for the government to publicize its economic policies. Equities Recommendations Currencies, Credit And Fixed-Income Recommendations
Feature We spent the past two weeks visiting and exchanging views with our clients in Asia. We presented our view that the ongoing stimulus measures are beginning to bear fruit in terms of stabilizing China’s economic activity, and that we expect the economic slowdown to bottom early next year. In addition, Chinese policymakers are signaling their willingness to accelerate stimulus on both monetary and fiscal fronts, which should mitigate the downside risks and help the economy regain traction in 2020. Interestingly, our view sparked divergent responses: clients outside of China were more upbeat about the state of the Chinese economy than clients from mainland China. While few investors we spoke to showed concerns over an imminent “hard landing” in China’s economy or systemic risk from China’s financial system, our mainland Chinese clients remain skeptical that the ongoing stimulus will be sufficient to revive the economy. They were also worried that financial regulations may be too restrictive to generate the amount of money growth needed for the economy. Another interesting observation was that while being pessimistic about the economy, our mainland Chinese investors share our assessment that Chinese domestic stocks still have some upside in the coming year. On the other hand, global investors, who are more sanguine about China’s economic recovery, prefer to wait on the sidelines before favoring Chinese investable stocks (Chart 1). Chart 1AA Tale Of Two Markets: Onshore Outperforms Global Markets... Chart 1B...While Offshore Underperforms Below we present some of the top questions that were posed by investors during our trip, along with our answers. We recap the conclusions of our view, and draw out the investment implications of the differences between the sentiments towards China’s equity markets, in the last question of the report. Q: Recent economic data suggests a weakening Chinese economy. Why do you think the economy will reach a bottom in 2020? Historically, China’s credit formation has consistently led economic activity by about three quarters (Chart 2). Even though credit growth this year has not been as strong as in previous expansionary cycles, a turning point in the credit impulse occurred at the start of 2019. This suggests that economic activity should turn around within the next two quarters. Chart 2Expecting A Turn In Q1 2020 Chart 3Emerging Green Shoots Furthermore, despite weakening headline economic data, some underlying components indicate promising improvements (Chart 3): Growth in infrastructure investment has ticked up modestly in the past couple months, and is set to improve further. The State Council mandated local governments to allocate the proceeds from special-purpose bond sales to infrastructure projects by the end of October. This, combined with a frontloading of next year’s local government bonds, should lend support to infrastructure spending in the coming months. After fluctuating in and out of contraction for a year, growth in auto manufacturing production picked up in August and remained positive through October. This improvement is due to less contraction in auto sales and a faster reduction in auto inventories. Moreover, electricity output surged in October, which also indicates that growth may be gaining momentum. Chart 4Trade Should Improve Into 2020 Lastly, global financial conditions have eased significantly and credit growth has picked up worldwide, which should help support global demand. Even though Sino-US trade negotiations are ongoing, our baseline view is that a “Phase One” trade deal will be inked in the next couple months. Eased trade tensions and even some rollbacks in the existing tariffs on Chinese export goods, coupled with improved global demand, should provide some tailwinds to China’s external sector (Chart 4). Q: What is your outlook on China’s economic policy for 2020? The Chinese economic growth model remains reliant on credit formation and capital investment. Therefore, the sustainability of an economic recovery depends on whether Chinese policymakers are willing to keep the stimulus wheel turning. Chart 5A Sign Of A Policy Shift For investors favoring China-related assets, the good news is that there has been an increasing urgency in policymakers’ tone to support economic growth since September. Capex growth from state-owned enterprises (SOEs) has increasingly outpaced the private sector, which is significant: A sustained rotation in the pace of SOE vis-à-vis private sector capex marked a turning point in the 2015-2016 cycle, when Chinese policymakers’ imperative to supporting growth outweighed their desire to continue with structural reforms (Chart 5). We do not expect a 2016-style drastic rise in SOE capex growth next year, because the current economic slowdown is not as severe or prolonged as in 2015. Nonetheless, the rotation in capex growth is an important signal that Chinese policymakers may be more willing to stimulate the economy by again allowing the state sector to upstage the private sector. In the meantime, we expect that some pro-growth “policy adjustments” will be deployed in 2020: Chart 6Infrastructure Investment Likely To Rise Monetary policy will incrementally ease, with one to two 10-15bps loan prime rate (LPR) cuts in the next 3-6 months. At the same time, China’s central bank (PBoC) will keep bank liquidity ample and commercial banks’ funding costs relatively low, by continuing frequent liquidity injections to stabilize the interbank rate. A further cut in the reserve requirement ratio (RRR) is also highly likely. Keeping banks well capitalized will partially mitigate the pressure commercial banks face from falling profit margins and rising credit defaults. Accommodative monetary conditions will also support more stimulus on the fiscal front. We expect that the National People’s Congress in March 2020 will approve higher quotas on the issuing of local government bonds. Chinese state-owned commercial banks will continue to be the main buyers for local government bonds. A portion of 2020 local government special-purpose bond issuance will be frontloaded to the remainder of 2019 and into the first months of next year. Relaxed capital requirements will likely boost local governments’ infrastructure project funding and expenditures. Our model suggests infrastructure spending should pick up from the current 3.3% year-on-year, to close to 7.5% in the second and third quarters next year (Chart 6). There are subtle signs that the government is starting to relax restrictions on the real estate sector. Land sales by local governments have increased since mid-2019, and the trend will continue into 2020 (Chart 7). Income from land sales accounts for 70% of local government revenues, thus allowing more land sales should help fund a larger local government spending budget next year. Declining government subsidies to shantytown renovation (namely the Pledged Supplementary Lending, or PSL) have recently abated and will likely continue to improve (Chart 8). Chart 7Some Improvement To Come In The Real Estate Sector Chart 8Government Subsidies Will Continue December’s Central Economic Work Conference (CEWC) will set policy priorities for the following year. We think Chinese policymakers will make economic growth a top priority for 2020. Credit growth swelled in the first quarter of 2019 following the December 2018 CEWC, and we expect a surge in early 2020 as well.Due to the unusually high credit growth in January this year and the seasonal factor next year (Chinese New Year will fall in January 2020), the surge in credit growth, on a year-over-year basis, will more likely be muted until towards the end of the first quarter and into the second quarter. Investors should overweight Chinese investable stocks in the next 6-12 months, but need to watch for more positive signs to upgrade tactical stance. Beyond the second quarter, however, the outlook gets cloudier as tension from the US election heats up and President Trump may change his trade negotiation strategies with China.1 This may have implications on China’s domestic policies. But for now, our baseline view is that Chinese policymakers will incrementally accelerate the pace of economic stimulus throughout next year. Q: Monetary policy has been accommodative for more than a year, but capex this year has fallen below market expectations compared with past cycles. How will further stimulus help to revive investment and economic growth next year? In short, our answer is this: interest rate cuts alone will not be enough to boost economic growth in China. Capex, and growth more generally, will only revive through synchronized policy support from the Chinese authorities. In a previous report2 we discussed that the lack of response to monetary easing has been due to a less effective monetary policy transmission mechanism, a reactive and reluctant central bank, and a debt-loaded corporate sector. More importantly, the “half-measured” stimulus has been preferred by Chinese authorities in this cycle, as they prioritized financial de-risking over growth and have significantly tightened financial regulations since 2016. Given the expected policy pivot to a more pro-growth stance in the coming year, the following underlines our conviction that capex should pick up in 2020. Modern Money Theory (MMT), with Chinese characteristics:3 local governments will ramp up debt again, and this quasi-fiscal stimulus will be a key support to the economy in 2020. During the 2015-2016 cycle, aggressive interest cuts did not result in a significant uptick in credit growth. Bank lending was not the core driver for economic recovery in 2016. The economy only bottomed following an unprecedented issuance of local government bonds after mid-2015 (Chart 9). Chinese authorities will keep a “back door” open: even though overall tight financial regulations will remain intact, we expect the PBoC to allow a more moderate contraction in shadow banking (Chart 10). This will provide smaller banks and enterprises access to tap into bank credit. Importantly, this means the government will acquiesce to local governments in providing extra funding through shadow banking. We already see local government financing vehicles (LGFV) making a comeback in recent months. Chart 9A Chinese Version Of MMT Chart 10The "Back Door" May Open Wider Small- and medium-sized enterprises (SMEs) will benefit from lowered financing costs through the new LPR system. As we pointed out in our previous report,4 the new LPR regime is not intended as much to expand bank credit as to help struggling SMEs survive economic hardships. This, along with tax cuts, should provide SMEs some relief from capital constraints. Q. CPI has been rising sharply and is above the government’s inflation target of 3%. Will inflation prevent the PBoC from maintaining an easy monetary policy? Chart 11PBoC Likely To Capitulate To Producer Deflation No. We think deflationary pressure in the industrial sector (measured by producer prices) poses a bigger threat to the economy, and that PBoC is more likely to loosen monetary policy than to tighten (Chart 11). Chart 12 shows that the recent surge in headline consumer prices has almost been entirely driven by soaring pork prices. There is compelling evidence from historical data that, unless core consumer price inflation also rises, climbing food prices alone will have a limited impact on PBoC policy (Chart 13). We think this approach is justified, as the necessity of “core feedthrough” is also what most central banks in the developed world look for when confronted with a detrimental supply shock. Chart 12Rising Pork Prices Have Driven Up Headline Inflation... Chart 13...But Won't Be Driving Up Interest Rates Chart 14A Wild Year For The RMB Core CPI has been trending downwards since February 2018, and there is no evidence to suggest that food prices will drive up core CPI inflation (Chart 13, bottom panel). This, in combination with deflating producer prices, means that the probability of tighter monetary policy over the coming 6-9 months is extremely low. In fact, we expect, with high conviction, that the PBOC will guide the LPR lower in the coming months. Q: What is your view on the RMB for 2020? The RMB depreciated by 5% against the US dollar from its peak in February this year, mostly driven by market expectations of US tariffs imposed on Chinese export goods. Interest rate differentials, short-term capital flows, and economic fundamentals all have played much smaller roles in the RMB’s value changes (Chart 14). The depreciation in the CNY/USD this year has pushed the RMB close to two sigma below its long-term trend (Chart 15). As we expect a “Phase One” trade deal to be signed and trade tensions abating at least in the near term, the RMB will face upward pressure through the first half of 2020. The appreciation will also be supported by, although to a lesser extent, China’s improved domestic economy, rising demand for RMB-denominated assets, and a weakening US dollar (Chart 16). According to our model, the USD/CNY exchange rate can return to a 6.8-7.0 range, if a significant portion of the existing tariffs is rolled back (Chart 17). This range seems to be within the “fair value” of the RMB, justifiable by the current China-US interest rate differential (Chart 14, bottom panel). Chart 15Has The RMB Gone Too Far? Chart 16Demand For RMB Assets On The Rise, Despite The Trade War However, it would not be in the PBoC’s best interests to let the RMB appreciate too rapidly, because an appreciating Chinese currency would act as a deflationary force on China’s export and manufacturing sectors. The large differential in the China-US interest rates would allow PBoC to cut interest and/or RRR rates, to ease upward pressure on the RMB. Chart 17Tariff Rollbacks Will Push Up RMB Q: How should equity investors position themselves towards China over the coming year? We are bullish on Chinese investable stocks in the next 6 to 12 months, based on our view that the Chinese economy will bottom in the first quarter next year, policy will be incrementally more supportive, and a “Phase One” trade deal will be signed soon. In the very near term, however, we think downside risks to Chinese equities are not trivial. We remain a neutral tactical stance, but will continue to watch for the following signs before upgrading our tactical call from neutral to overweight.5 Chart 18A (top panel) shows that cyclical stocks remain very depressed relative to defensives, underscoring investors’ lack of confidence in the Chinese economy and trade negotiations. A breakout in cyclicals versus defensives would signify a major improvement in investor sentiment towards Chinese economic growth. An uptick in the relative performance of industrials and consumer staples (Chart 18A, bottom panel). The negative sensitivity of industrials and positive sensitivity of consumer staples to monetary policy suggests that the relative performance between the two sectors may be a reflationary barometer for China’s economy. The relative performance trend remains off its recent low, which suggests that China’s existing policy stance has not yet turned more reflationary. A technical breakdown in the relative performance of healthcare and utility stocks (Chart 18B) would also be a bullish sign. Investable health care and utilities stocks have historically led China’s economic activity, core inflation and stock prices by 1-3 months. A technical breakdown in the relative performance of these sectors would signify that market participants anticipate a bottom in China’s economy. As we mentioned at the outset, we observed an interesting divergence in sentiment among our domestic versus global investors. This divergence is reflected in both the onshore and offshore stock markets; year to date, onshore A shares have outperformed global benchmarks by 5.6% (Chart 1, on page 1 of the report). Chart 18AWaiting For A Telltale Sign... Chart 18B...Before A Tactical Upgrade However, all of the outperformance in A shares occurred before end April, when the trade talks broke down and domestic credit expansion significantly slowed from the first quarter. Since May, the relative performance of A shares in US dollar terms has been mostly flat, reflecting the fact the markets were not expecting a significant stimulus forthcoming. Chinese investable stocks, on the other hand, have been trading heavily on the day-to-day news surrounding the trade negotiations and have significantly underperformed both domestic A shares and global benchmarks. Therefore, our base case view of a trade truce coupled with an improved Chinese economy and more supportive policy near year, warrant a cyclical overweight stance favoring Chinese investable stocks over their domestic peers. Earnings from both onshore and offshore markets will benefit from a modest improvement in economic activity, but we think the investable market will benefit more from the trade truce and more upside growth potential. Stay tuned. Jing Sima China Strategist jings@bcaresearch.com Footnotes 1Please see Geopolitical Strategy Special Report, "Is China Afraid Of The Big Bad Warren?" dated October 25, 2019, available at gps.bcaresearch.com 2Please see China Investment Strategy Weekly Report, " Threading A Stimulus Needle (Part 1): A Reluctant PBoC," dated July 10 2019, available at cis.bcaresearch.com 3We call it a “MMT” because China’s state-owned commercial banks own approximately 80% of local government bonds. The commercial banks are essentially backed by China’s central bank, which has a fiat currency system and can make independent monetary policy decisions. 4Please see China Investment Strategy Weekly Report, "Mild Deflation Means Timid Easing," dated October 9, 2019, available at cis.bcaresearch.com 5Please see China Investment Strategy Special Report, "A Guide To Chinese Investable Equity Sector Performance," dated October 30, 2019, available at cis.bcaresearch.com Cyclical Investment Stance Equity Sector Recommendations
Underweight Similar to utilities, REITs have come to the forefront lately as they have populated the top return sector ranks. Importantly, today several key factors signal that investors should shed public market real estate exposure. Namely, weakening supply/demand dynamics, pricing pressures, macro headwinds and still pricey valuations (primarily rock bottom cap rates) are all firing warning shots. On the demand front, not only our proprietary real estate demand indicator has sunk recently, but also the latest Fed Senior Loan Officer survey revealed that demand for CRE loans remains feeble (third & bottom panels). Simultaneously, fewer bankers are willing to extend CRE credit according to the same quarterly Fed survey (second panel). This tightening backdrop coupled with decelerating credit growth, will continue to weigh on CRE prices and S&P REITs. Bottom Line: We reiterate our underweight rating in the S&P real estate sector. For more details, please refer to the most recent Weekly Report. The ticker symbols for the stocks in this index are: BLBG – S5RLST – AMT, PLD, CCI, SPG, EQIX, WELL, PSA, EQR, AVB, SBAC, O, DLR, WY, VTR, ESS, BXP, CBRE, ARE, PEAK, MAA, UDR, EXR, DRE, HST, REG, VNO, IRM, FRT, KIM, AIV, SLG, MAC.
Dear Client, Instead of our regular weekly report next Monday, this Friday November 22, you will receive our flagship publication “The Bank Credit Analyst” with our annual investment outlook. Our regular publication service will resume on December 2 with our high-conviction calls for 2020. Kind regards, Anastasios Avgeriou Highlights Portfolio Strategy Weakening supply/demand dynamics, pricing pressures, macro headwinds and pricey valuations are all warning that REITs are headed south. Global capex blues and the ongoing manufacturing recession, the resilient US dollar and weak operating metrics all confirm that an underweight stance is still warranted in the S&P communications equipment index. Recent Changes There are no changes to our portfolio this week. Table 1 Feature The S&P 500 made fresh all-time highs again last week, as investors focused on hopes of a US/China trade deal and continued to ignore negative data/news at their own peril. Domestically, unemployment insurance claims jumped to the highest level since June, and none of the major market and industry groups showed a gain in output on a month-over-month basis in October according to the latest Fed industrial production release. Internationally, Korean exports remain in the doldrums, Chinese data releases were weak across the board, and the mighty US dollar is making multi-decade highs versus a slew of EM currencies. Chart 1Disquieting Gap All of this begs the question is global growth going to recover and aid the equity market grow into its lofty valuation? Our indicators suggest that a definitive earnings trough is now pushed out to Q2/2020. Thus, equity market caution is still warranted. Given all the recent equity market euphoria, we feel more and more like “the lone calf standing on the desolate, dangerous, wolf-patrolled prairie of contrary opinion” as – arguably the greatest trader of all time – Jesse Livermore mused roughly a century ago. Share buybacks have been a key pillar underpinning stocks since the GFC averaging roughly $500bn/annum since 2010. But, last year equity retirement jumped to nearly $1tn/annum. That is clearly unsustainable, warning that there is a disconnect between the S&P 500 and already steeply decelerating share buybacks. Our equity retirement estimate for next year is a return to the 10-year average, signaling that the market may hit a significant air pocket (top panel, Chart 1). Another perplexing recent phenomenon has been the lack of buying on margin that typically confirms SPX breakouts. While this episode may be similar to the 2015/16 episode, if margin debt does not recover soon it will exert downward pull on the broad market (bottom panel, Chart 1). Turning over to earnings, revenues, margins and the forward multiple is instructive. Turning over to earnings, revenues, margins and the forward multiple is instructive. Chart 2 highlights the S&P 500 earnings growth surprise factor. In more detail, this IBES/Refinitiv data show how accurate the sell side analysts’ 12-month forward EPS forecasts have been over time: a reading above zero implies the analyst community was too timid, while a fall below zero signals analysts were too optimistic. Chart 2Unhinged From The EPS Accuracy Signal Equity market momentum moves with the ebb and flow of this factor and given the still downbeat message both from our SPX profit model (please refer to our recent webcast slides) and our simple liquidity indicator (please see Chart 4 from last week’s publication), we doubt 10% profit growth is even plausible for 2020. On the margin front, all four key profit margin drivers are on the brink of turning from tailwinds to headwinds as we recently highlighted in our “Peak Margins?” Special Report. Revenue growth is also at risk of a standstill. Domestic producer prices are deflating, and the ISM prices paid index has been clobbered. German, Japanese, Korean and Chinese wholesale prices are contracting and the OECD’s composite PPI measure is also sinking, suggesting that final demand is anemic at best. Under such a dire global pricing backdrop, it will be challenging for SPX sales to sustain their positive momentum, especially if the greenback remains well bid (Chart 3). Chart 3Top Line Growth Troubles Forward multiples have slingshot higher despite a near 40bps increase in the 10-year yield since Labor Day. When the discount rate rises the multiple should come in and vice versa. Thus, we would lean against the recent spike in the S&P 500 forward P/E (10-year yield shown inverted, Chart 4). This week we are updating our negative views on a niche high-yielding sector and a tech subgroup. Finally, while sifting through market internals, we recently stumbled upon the GICS2 S&P consumer services index. Digging deeper into services was revealing. This relative share price ratio has gapped down of late. One of the reasons is that the services component of the personal consumption expenditure (PCE) data is decelerating (PCE services shown advanced, middle panel, Chart 5). The ISM non-manufacturing survey is also an excellent leading indicator of the S&P consumer services index, and warns that things will likely get worse before they get better (bottom panel, Chart 5). Chart 4Lofty Valuations Chart 5Market Internals Signal: Sit This One Out This week we are updating our negative views on a niche high-yielding sector and a tech subgroup. Getting Real With Real Estate We would refrain from chasing high yielding real estate stocks higher, and would rather avoid them altogether at the current juncture. Similar to utilities, REITs have come to the forefront lately as they have populated the top return sector ranks. However, real estate stocks, which have split out of the financials sector, are a niche GICS1 sector with a mere 3% market capitalization weight in the SPX, and have not driven the S&P 500 to all-time highs. Instead, tech stocks have, owing to their 23% market capitalization weight, as we have shown in recent research.1 Importantly, several key factors continue to signal that investors should shed public market real estate exposure. Namely, weakening supply/demand dynamics, pricing pressures, macro headwinds and still pricey valuations (primarily rock bottom cap rates) are all firing warning shots. The commercial real estate (CRE) sector is a bubble candidate that exemplifies this cycle’s excesses. As we have highlighted in the past, CRE prices sit at roughly two standard deviations above both the historical time trend and the previous cycle’s peak (not shown).2 Worryingly, CRE demand is waning. Not only our proprietary real estate demand indicator has sunk recently, but also the latest Fed Senior Loan Officer survey revealed that demand for CRE loans remains feeble (third & bottom panels, Chart 6). Simultaneously, fewer bankers are willing to extend CRE credit according to the same quarterly Fed survey (Chart 7). This tightening backdrop is weighing on CRE credit growth and CRE prices (second panel, Chart 6). In fact, absent credit growth providing the necessary fuel to sustain the CRE price inflation frenzy, there are rising odds that investors pull the plug on REITs (top panel, Chart 7). Chart 6Demand Ails Chart 7Time To... Already, occupancy rates have crested and there are increasing anecdotes of credit quality deterioration. As a result, CRE rents are also failing to keep up with inflation which eats into relative cash flow growth prospects (Chart 8). The supply side build up tilts this delicate balance further into deficit. Non-residential construction shows no signs of abating, with multi-family housing starts still running at an historically high rate of roughly 400K/annum (Chart 9). Such relentless overbuilding sows the seeds of the eventual felling in CRE prices and rents, which should also dent the S&P real estate sector. Chart 8...Lighten Up On Real Estate Chart 9Supply Build Up Is Deflationary Meanwhile, interest rate related headwinds will also weigh on this high-yielding sector in coming quarters, especially if the selloff in the bond market gains steam as BCA’s fixed income strategists continue to expect. While in the 2000s REITs were positively correlated with the 10-year Treasury yield, since 2010 this relationship has flipped and is now a tight inverse correlation (Chart 10). Chart 10Rising Yields = Sell REITs Finally, our proprietary Valuation Indicator (VI) has enjoyed an impressive run since the 2017 trough and despite the recent relative selloff remains in overvalued territory. Our Technical Indicator (TI) hit a wall of late near one standard deviation above the historical mean and has only partially unwound the overbought reading since the early 2018 bottom. If our thesis pans out, we expect heightened selling pressure to weigh further on our VI and TI (Chart 11). Chart 11Still Too Pricey Bottom Line: We reiterate our underweight rating in the S&P real estate sector. The ticker symbols for the stocks in this index are: BLBG – S5RLST – AMT, PLD, CCI, SPG, EQIX, WELL, PSA, EQR, AVB, SBAC, O, DLR, WY, VTR, ESS, BXP, CBRE, ARE, PEAK, MAA, UDR, EXR, DRE, HST, REG, VNO, IRM, FRT, KIM, AIV, SLG, MAC . Lost Signal The communications equipment rally stalled early in the summer and has since morphed into a bear market. We are sticking with our underweight recommendation, especially given a darkening profit outlook for this niche tech sub-group. Bellwether CSCO’s latest guidance was weak and confirmed that this capex-laden tech sub-index is in for a rough ride. Worryingly, CSCO’s key enterprise segment has no pulse. Historically, this data series has been positively correlated with telecom carrier capital outlays and the current message is grim (second panel, Chart 12). Tack on the ongoing manufacturing recession with CEOs canceling/postponing capital spending plans and the outlook dims further for the revenue prospects of communications equipment vendors (third & bottom panels, Chart 12). Chart 12Heed The CSCO Warning Adding insult to injury, the US/China trade war is further complicating the picture. The ongoing tariffs have exacerbated the global growth slowdown and global capex plans have come under intense scrutiny. The IFO’s World Economic Outlook capex intentions survey has plunged, warning that global exports of telecom gear have ample downside (Chart 13). Chart 13Global Capex Blues Chart 14US Dollar The Deflator The greenback’s resilience is also sapping business purchasing power, especially in the emerging markets, denting final-demand. Therefore, the US dollar’s appreciation robs communications equipment manufacturers’ pricing power, makes their goods more expensive in the global market place, and as a consequence forces market share losses on them (Chart 14). The greenback’s resilience is also sapping business purchasing power, especially in the emerging markets, denting final-demand. The implication of weakening pricing power is that profits will likely underwhelm. Currently, the sell-side is penciling in roughly 10% EPS growth for the S&P communications equipment index over and above the SPX in the next twelve months. This is a tall order and we would lean against such extreme analyst optimism (bottom panel, Chart 15). Operating metrics are quickly losing steam, another harbinger of profit ails for this tech sub-group. In more detail, our productivity proxy has taken a steep turn for the worse and industry executives have also put investment projects on hold (middle panel, Chart 15). Moreover, the communication equipment new orders-to-inventories ratio is contracting and industry resource utilization is probing multi-year lows, according to the Fed’s latest industrial production release. Under such a backdrop, relative top line growth is on track to level off and likely flirt with the contraction zone (Chart 16). Chart 15Operating Metric... Chart 16...Dysphoria Netting it all out, global capex blues, the resilient US dollar and weak operating metrics all confirm that an underweight stance is still warranted in the S&P communications equipment index. Bottom Line: Continue to avoid the S&P communications equipment index. The ticker symbols for the stocks in this index are: BLBG – S5COMM – CSCO, JNPR, MSI, ANET, FFIV. Anastasios Avgeriou US Equity Strategist anastasios@bcaresearch.com Footnotes 1 Please see BCA US Equity Strategy Insight Report, “Deciphering Sector Returns” dated August 30, 2019, available at uses.bcaresearch.com. 2 Please see BCA US Equity Strategy Special Report, “10 Most FAQs From The Road” dated April 8, 2019, available at uses.bcaresearch.com. Current Recommendations Current Trades Size And Style Views Stay neutral cyclicals over defensives (downgrade alert) Favor value over growth Favor large over small caps (Stop 10%)
Highlights While the Caixin PMI is pointing to improving economic conditions, other data series still reflect weak growth. China’s business cycle is likely to bottom in Q1 of next year, rather than in Q4. The failure of Chinese stocks to significantly outperform the global benchmark and the continued underperformance of cyclical stocks underscore the near-term risks to equities if this month’s trade & manufacturing data disappoint. We continue to recommend a neutral tactical stance (0-3 months) towards Chinese equities versus global stocks, but expect them to outperform on a cyclical (6-12 month) time horizon after economic growth firmly bottoms. Feature Tables 1 and 2 on pages 2 and 3 highlight key developments in China’s economy and its financial markets over the past month. On the growth front, the data remains mixed: the strength in the October Caixin PMI and the September pickup in electricity production are positive signs, but other important datapoints still point to weak conditions. We continue to expect that China’s business cycle is likely to bottom in Q1 of next year, rather than in Q4. We continue to expect that growth will bottom in Q1 of next year, rather than in Q4. Table 1China Macro Data Summary Table 2China Financial Market Performance Summary Within financial markets, Chinese stocks have rallied in absolute terms over the past month in response to greatly increased odds of a trade truce between China and the US, but have failed to outperform the global benchmark. This, in combination with the continued underperformance of cyclical stocks, suggests that hard evidence of an economic improvement in China will be required before Chinese stocks begin to rise in relative terms. The risk of near-term underperformance is still present, especially if October’s hard trade and manufacturing data disappoint. We continue to recommend a neutral tactical stance (0-3 months) towards Chinese equities versus global stocks, but expect them to outperform on a cyclical (6-12 month) time horizon after economic growth firmly bottoms. In reference to Tables 1 and 2, we provide below several detailed observations concerning developments in China’s macro and financial market data: Chart 1Not Yet A Clear Change In Trend The Bloomberg Li Keqiang index (LKI) ticked up in September, led by an improvement in electricity production. An improvement in the LKI in lockstep with a rising Caixin manufacturing PMI (discussed below) raises the odds that the Chinese economy may be bottoming earlier than we expect, but for now only modestly so. Chinese economic data is highly volatile, and Chart 1 shows that the improvement in the LKI is very muted when shown as a 3-month moving average. In addition, a slight improvement also occurred earlier this year, but proved to be a false signal. All told, for now we continue to expect that growth will bottom in Q1 of next year, rather than in Q4. Our leading indicator for the LKI was essentially flat in September on a smoothed basis, with sequential declines in M3 growth and the credit components of the indicator offsetting improvements in monetary conditions and M2. From a big picture perspective, the story of our LKI leading indicator remains unchanged: it continues to trend higher, at a much shallower pace than has been the case during previous easing cycles. The uptrend is the basis of our forecast that China’s growth will soon bottom, but the uncharacteristically shallow nature of the rise suggests that the eventual recovery will be modest. On a smoothed basis, Chinese residential floor space sold improved again in September, following a very significant rise in August. Over the past 12-18 months, we had emphasized that the double-digit pace of growth in China’s housing starts was unsustainable because it had entirely decoupled from the trend in sales (which have reliably led construction activity over the past decade). This gap disappeared over the summer due to a significant slowdown in starts, which is what we predicted would occur. However, the recent acceleration in floor space sold represents a legitimate fundamental improvement in the housing market, that for now is difficult to attribute to the recent drivers of housing demand (Chart 2).1 Still, investors should continue to watch China’s housing demand data closely over the coming few months, for further signs of a potential re-acceleration in housing construction. Investors need to see meaningful sequential improvements in China’s October trade and manufacturing data. The October improvement in China’s Caixin PMI was quite notable, as it appears to confirm the full one-point rise in the index that occurred in September and suggests that manufacturing in China’s private-sector is now durably expanding. Still, conflicting signals remain: the official PMI fell in October and remains below 50, and the significant September improvement in the Caixin PMI was not corroborated by an improvement in producer prices or nominal import growth (Chart 3). As PMIs are simply timely coincident indicators that do not generally have leading properties, investors will need to see meaningful sequential improvements in China’s October trade and manufacturing data in order to have confidence that the Caixin PMI improvement is not a false signal. Chart 2It Is Not Yet Apparent What Is Driving A Pickup In Housing Demand Chart 3If The Caixin PMI Is Not A False Signal, A Hard Data Improvement Must Occur Soon Chinese stocks have rallied 6-7% over the past month in absolute terms, but have modestly underperformed global equities. The rally in global stock prices has occurred largely in response to the mid-October announcement of a trade truce between China and the US. The failure of Chinese stocks to outperform during this period suggests hard evidence of an economic improvement in China will be required before Chinese stocks begin to outpace their global peers. At the regional equity level, the other notable development over the past month has been the continued outperformance of the MSCI Taiwan Index versus the global benchmark. Taiwan’s outperformance has been boosted by a rising TWD versus the dollar, but Taiwanese stocks have also outperformed in local currency terms. Taiwan province is highly exposed to global trade, and it is not surprising that equities have reacted positively to the prospect of a trade truce between the US and China. Further meaningful outperformance, however, will likely require a re-acceleration in Taiwanese exports, as export growth has merely halted its contraction (Chart 4). Within China’s investable equity market, cyclicals have underperformed defensives over the past month after having rallied significantly from late-August to mid-September (Chart 5). We noted in our October 30 Special Report that these cyclical sectors have historically been positively correlated with pro-cyclical macroeconomic and equity market variables,2 and their underperformance versus defensives is thus consistent with the failure of Chinese stocks in the aggregate to outperform global equities over the past month. In both cases, outperformance likely requires hard evidence of an upturn in China’s business cycle. Chart 4Export Growth Needs To Improve In Order To Expect Further Taiwanese Relative Outperformance Chart 5Cyclical Underperformance Underscores The Near-Term Risks To Chinese Vs. Global Stocks We do not take the rise in Chinese government bond yields as necessarily indicative of an imminent breakout in relative equity performance. Chart 6Chinese Relative Equity Performance Leads Bond Yields, Not The Other Way Around Chinese 10-year government bond yields have risen roughly 15bps over the past month, and are now 30bps off of their mid-August low. Many market participants view Chinese government bond yields as a leading growth barometer, but 10-year yields have actually lagged Chinese investable stock performance over the past two years (Chart 6). As such, we do not take the rise in yields as necessarily indicative of an imminent breakout in relative equity performance. Chinese onshore corporate bond spreads have declined over the past month as government bond yields have been rising, continuing a pattern of negative correlation between the two that has prevailed since early-2018. A negative correlation between yields and corporate bond spreads is a normal relationship, and it suggests that spreads may narrow over the coming year if the Chinese economy bottoms in Q1, as we expect. Spreads remain elevated despite the substantial easing in monetary conditions that occurred last year, due to persistent concerns about rising onshore defaults. While we acknowledge that defaults are indeed occurring, we have argued on several occasions that the pace of defaults would have to be much faster in order for current spreads to be justified.3 We continue to recommend a long RMB-denominated position in China’s onshore corporate bond market. The RMB has appreciated over the past month in response to news of a likely trade truce between the US and China, with most of the rise having occurred versus the US dollar. USD-CNY is likely to sustainably trade below the 7 mark in a trade truce scenario, but how much further downside is possible in the near-term absent a re-acceleration in Chinese economic activity remains an open question. With the Fed very likely on hold for the next year, stronger than expected economic growth in China would likely catalyze a persistent selloff in USD-CNY barring a re-emergence of the Sino-US trade war. This, however, is not our base-case view, meaning that we expect modest post-deal strength in the RMB. Jonathan LaBerge, CFA Vice President Special Reports jonathanl@bcaresearch.com Jing Sima China Strategist JingS@bcaresearch.com Footnotes 1. Please see China Investment Strategy Special Report, “China’s Property Market: Where Will It Go From Here?” dated September 13, 2018. 2. Please see China Investment Strategy Weekly Report, “A Guide To Chinese Investable Equity Sector Performance,” dated October 30, 2019. 3. Please see China Investment Strategy Weekly Reports, “A Shaky Ladder,” dated June 13, 2018, "Investing In The Middle Of A Trade War,” dated September 19, 2018 and "2019 Key Views: Four Themes For China In The Coming Year,” dated December 5, 2018. Cyclical Investment Stance Equity Sector Recommendations
Highlights The banks got the current earnings season off to a good start, … : Lending growth may be running in place, and net interest margins are under pressure, but positive operating leverage helped the banks beat expectations, and they are returning gobs of cash to their shareholders. … are quite constructive about the economy, … : The big banks’ CFOs and CEOs were uniformly bullish about the U.S. economy based on their perceptions of household and corporate health. … expect stellar credit performance to continue for the foreseeable future, … : Net charge-off and non-performing loan ratios are near all-time lows and the banks don’t see them rising any time soon. … and appear to be willing to extend loans in all categories except commercial real estate: Every bank sees unattractive competition in commercial real estate lending and plans to continue shrinking its CRE loan book. Nothing To See Here Two-fifths of the companies in the S&P 500 have now reported their quarterly earnings, and after this week the share will be two-thirds. At the aggregate level, it appears as if investors’ worst fears will not be realized, just as they weren’t in the first two quarters of the year. 2018’s greater than 20% year-on-year growth, powered by the sharp cut in the top corporate income tax rate, has rolled off, but earnings have yet to contract. They were projected to fall by a little over 3% at the beginning of this reporting season, but repeated practice has allowed corporate managements to hone their underpromise-and-overdeliver skills to a fine point, and we won’t be surprised if they avert an outright contraction. Chart 1Profit Margins Are Being Squeezed, ... Chart 2... But Neither Growing Compensation, ... Earnings growth has been stagnant this year (Chart 1, bottom panel), though revenues have grown a little faster than nominal GDP (Chart 1, top panel), with which they should converge over time. Profit margins have finally come under pressure, though it’s not exactly clear why. Employee compensation is businesses’ biggest expense by far, and while it has risen from its lows, its growth decelerated last quarter (Chart 2). Dollar strength is a headwind for U.S.-based multinationals, but the dollar only really moved last quarter, after ending the first half where it started the year (Chart 3). Dollar gains weigh on revenues just as surely as they do on profits, though we would not be at all surprised if the share of non-dollar expenses is a good bit smaller than the widely quoted 33-40% estimate of S&P 500 constituents’ foreign sales. Chart 3... Nor A Stronger Dollar Is A Clear-Cut Culprit Rate cuts have sparked a wave of mortgage refinancings, shifting wealth from mortgage investors to homeowners, who are more likely to spend it. Easier monetary conditions should help grease the skids for future earnings growth, both in the U.S. and abroad, and we expect the Fed will cut the fed funds rate by another 25 basis points when it meets this week. We have sympathy for the argument that since interest rates were not a meaningful constraint on growth, cutting them is not likely to provide much of a catalyst. Falling rates have provoked a wave of mortgage refinancings (Chart 4), however, so even if they don’t drive a big lending increase, they are already on their way to putting more money in the pockets of homeowners. Lower rates also reduce the risk of default by lowering debt-service costs for adjustable-rate borrowers, and by encouraging investors who need income to venture further out the risk curve, providing ample capital for borrowers seeking to extend their maturing obligations. Chart 4Putting More Money In Homeowners' Pockets Follow The Money Chart 5Bank Stocks Are Probing Resistance For two years, beginning in 2014, we reviewed the biggest banks’ earnings calls every quarter. The goal was to observe the give and take between bank management and sell-side analysts to gain some insight into the lending market and where it might be headed. We specifically sought information about banks’ willingness to lend, consumers’ and businesses’ appetite for credit, borrower performance, and the banks’ bottom-up perspective on the economy. We were also trying to glean insight into mortgage lending and what it might imply for residential investment. Studying the banks is a natural pursuit for a firm that was founded upon the insight that following money flows through the banking system would provide us with a window into the future direction of the economy and financial markets, and we return to it today. Our analysis is not meant to evaluate the banks’ own investment potential, though we note that they are testing resistance once again (Chart 5), and our Global Investment Strategy and U.S. Equity Strategy services both recommend overweighting them. This round of calls found bank management teams eager to ramp up their distributions to shareholders and optimistic about their ability to deploy technology to drive further efficiency gains. Big Banks Beige Book As a group, the banks were constructive on the economy. Despite widespread recession concerns, they do not see evidence of a looming slowdown from their interactions with consumers and businesses. Overall loan growth has remained around 5% over the last year and a half (Chart 6), while corporate and industrial (C&I) loan growth has ground to zero over the last thirteen weeks (Chart 7). The CEOs and CFOs do not see the C&I slump as the beginning of a worrisome trend, though, and global corporate bond issuance hit an all-time high in September, led by sizable issues from mega-cap U.S. companies. Businesses seeking credit are having no trouble getting it, though all the banks expressed an intention to continue cutting back their exposure to commercial real estate (CRE) loans. Chart 6Bank Lending Is Supporting Activity Without Risking Overheating Chart 7Lending Momentum Has Slowed, But It's Okay Another commercial real estate issue emerged across the calls: several of the biggest banks are consolidating their branch footprints. Prompted by questioning from one analyst, they touted branch closures as a way to enhance efficiency. We do not know if a reduction in bank demand for branch space would have an observable effect on demand for retail space across the country, but it certainly would in Manhattan. It seems possible that branch closures could pressure some retail lessors’ profitability, and thereby act as a drag on CRE whole-loan and CMBS performance at the margin. The Economy [C]onsumer spend and … confidence continue to be strong. I think business activity continues to be strong. I think it’s moderated somewhat because of … trade policy, but generally, I think the economy is solid. (Dolan, USB CFO) I think it’s fair to say that perhaps marginal investment is being impacted by trade fatigue in terms of the uncertainty, but … [there’s] still growth. … [T]he consumer is incredibly strong, … spending is strong, sentiment is strong, … credit is good. [I]t is true that [the recent ISM manufacturing and non-manufacturing surveys] were disappointing[,] so [there are] cautionary signs, but credit remains very good and there is still very healthy business activity. (Piepszak, JPM CFO) In general, our commercial customers continue to see moderate demand and no widespread issues related to trade uncertainty and interest rate changes. … [W]hile our customers are cautious, the most common concern they identify is their ability to hire enough qualified workers. (Shrewsberry, WFC CFO) Consumer payments up 6% year-to-date … [and 6% year-over-year 3Q growth in both our small business segment and total commercial loans] are tangible examples that the U.S. economy is still in solid shape, despite the worries and concerns about trade wars, capital investment slowdowns or other global macro conditions. (Moynihan, BAC CEO) Borrower Performance [W]e’ve had growth in the United States for the better part of 10 years [a]nd … credit is extraordinarily good. … [C]onsumer credit, commercial credit, wholesale is extraordinarily good, it can only get worse if you have a [turn in the] cycle. [Our guidance relates to expected performance across a full cycle.] We’re at the over-earning part of the cycle [beating the through-the-cycle expectation] in credit today, and [at] one point we’ll be at the under-earning part [pulling the full result down to our expectation]. (Dimon, JPM CEO) Our net charge-off rate remains near historic lows at 27 basis points (Chart 8). (Shrewsberry, WFC) Chart 8C&I Charge-Off Rates Are Near Their Historic Lows Credit quality remains stable, and we are not seeing any early indicators in our portfolio that cause us concern. (Cecere, USB CEO) Banks see no broad credit warning signs, but they're perfectly happy to let non-bank lenders take some commercial real estate share at this point of the cycle. We closely monitor our commercial portfolio for signs of weakness and credit quality indicators remain strong. (Shrewsberry, WFC) Lender Willingness [W]e are mindful that at some point, the industry will experience a credit downturn, and we remain disciplined in terms of origination quality and our long-term strategy of remaining within our defined credit box regardless of the competitive environment. (Cecere, USB) [Commercial] real estate banking [declined] as we remain selective, given where we are in the cycle. (Piepszak, JPM) [Commercial real estate lending] is one market where there’s late cycle behavior, there’s lots of non-bank competitors, … more than bank competitors. And so we really have to pick our spots in order to maintain our risk/reward, credit and pricing in loan terms quality. … I wouldn’t look for it to grow meaningfully until the cycle turns and our best customers have really interesting opportunities to put their own capital to work. (Shrewsberry, WFC) [Our declining commercial real estate lending is] really a function of [competition] that we’re not comfortable with. (Cecere, USB) Banks’ Real Estate Demand [C]ustomer behaviors are changing. The amount of transaction activity that’s happening in the branches is significantly less[.] In fact, … roughly 70, 80% of it goes through the digital channel today. So that gives us the opportunity to really reconfigure the branch network, both in terms of size and numbers[.] I think those trends are going to continue … , and … we may accelerate or increase some of [our right-sizing] activity[.] (Dolan, USB) Teller and ATM transactions declined 6% from a year ago, reflecting continued customer migration to digital channels. We’ve consolidated 130 branches in the first nine months of this year, including 52 branches in the third quarter. (Shrewsberry, WFC) [D]o we continue to work on real estate configurations that were down 50 million square feet from the start of 2010[?] [C]an we push [the occupancy rate] up, can we densify the space[?] (Moynihan, BAC) Investment Implications While rereading the April 2014 U.S. Investment Strategy that reviewed the big banks’ 1Q14 earnings calls, we were struck by how similar the picture is today. Back then, we described the central challenge for investors as choosing between mushy fundamentals and generous monetary policy that might be expected to inspire a valuation overshoot. As we do now, we anticipated that activity would soon pick up, providing markets with a fundamental boost, but we also had the sense that “policy settings are such that no much more than the status quo may be required to keep the party going.” We reiterated our equity overweight and our preference for spread product over Treasuries. Between inflection points, investing is an exercise in trend following, and there's no reason to believe that the monetary policy trend is about to change without clear advance notice. Although we are congenitally optimistic about our species and our country, we are not perma-bulls. We simply recognize that, between inflection points, investing is an exercise in trend following, no matter how uncomfortable it may make an investor to leave the portfolio dials alone for a while. As long as the monetary policy backdrop remains extremely accommodative across all of the major developed economies, and central banks are set to add even more accommodation before they start removing it, the bullish trend will remain in place. The prospective real returns of cash and highly-rated sovereign bonds are likely to remain negative for a while against that backdrop, encouraging investors to direct their marginal investment dollar to risk assets as long as a fundamental reversal is not imminent. We think a fundamental inflection is at least two years away, and therefore continue to believe that it is too early to de-risk investment portfolios. We reiterate our recommendation that investors remain at least equal weight equities in balanced portfolios, and at least equal weight spread product within their fixed-income allocations. Doug Peta, CFA Chief U.S. Investment Strategist dougp@bcaresearch.com
ハイライト
通貨市場は短期的な期待と長期的な要因の点で二分されている。スウェーデンクローナ、ノルウェークローネ、英ポンドは長期的には堅調に買いだが、短期的には非常にボラタイルなままでいる可能性がある。
我々はドルの単純な押し目買いよりもクロス通貨に引き続き注目している。SEK/NZD、GBP/JPY、NOK/SEKはロングを維持。利益保護のためGBP/JPYのロスカットを引き締める。
世界的な成長が改善すればEUR/SEKは天井を打つはずだ。
先週のレポートで推奨した通り、金/銀比率を90で売る。1
特集
Chart I-1
2018年以降の一方通行
2018年以降の一方通行
2018年以降の一方通行
我々が注目するG10通貨の中で、最も不可解なのはおそらくスウェーデンクローナだ。リクスバンクは今年利上げを行った数少ない中央銀行の一つだが、クローナは依然としてG10で最も弱い通貨である。確かにスウェーデンの製造業のパフォーマンスはみじめで、特に9月はそうだったが、これはスウェーデンだけの話ではない。製造業の深刻な景気後退を経験しているユーロ圏の方が、よりハト派な欧州中央銀行（ECB）にもかかわらず通貨のパフォーマンスは良好だった。
クローナのアンダーパフォーマンスは、世界的な製造業の景気後退が長引くことを示しているのか、それともスウェーデン固有の内生的な問題を示しているのかという疑問を投げかける。言い換えれば、USD/SEK（さらにはUSD/NOK）の上昇を牽引してきたのはドル高なのか、それともより国内的な要因なのか（Chart I-1）？ もし後者であれば、反転が近づいている場合に注目すべき重要な指標は何か？
ソフトデータ対ハードデータの議論
スウェーデンにとって大きな問いは、製造業がただボラタイルに底打ちしているだけなのか、それともこれからさらに大きく収縮するのか、という点だ。鉱工業生産は現在前年比で4％成長しているが、ソフトデータのシグナルは二桁の縮小を示唆している（Chart I-2、上段）。したがって、投資家の認識と現実の間に大きな乖離があるか、あるいは我々がはるかに深刻な製造業の落ち込みの瀬戸際にいるかのどちらかだ。為替は幅広い経済データの織り込みが極めて流動的であり、スウェーデンの場合は世界成長の見通しを織り込む傾向にある。しかし、EUR/SEKが10.8、USD/SEKが9.7（後者は2008年の高値を大きく上回る）であることを踏まえれば、深刻な不況以外の結果であればクローナは強くなると見て差し支えない。
スウェーデン製造業の底を示す比較的一貫した指標の一つは新規受注対在庫比率だ（Chart I-2、下段）。9月の低下は不安を誘う。しかし、製造業PMIとは異なりこの比率は新たな安値を付けていない点は注目に値し、我々が長期的な落ち込みではなくボラタイルな底打ちプロセスにあるかもしれないという暫定的な証拠である。我々がこのような発散を最後に見たのは2011/2012年の欧州債務危機の最中であり、その際にはスウェーデンのハードデータが最終的に経済全体の正しいシグナルを送った。
製造業の悪化は、まだ国内消費一般や労働市場には影響を与えていない。
製造業の悪化は、まだ国内消費一般や労働市場には影響を与えていない。PMI指数の輸入項目は輸出のそれを大きく上回っている。一方で、PMIの雇用項目は今年の中頃から安定化し始めており、雇用成長は約1％前後で底打ちするはずだ（Chart I-3）。スウェーデンの輸出は多くの先進国よりも製造業の上位サプライチェーンに位置しており、自動車は重要な役割を果たす。しかしこれまでのところ、スウェーデン経済は自動車の減速を比較的うまく耐え抜いており、生産は依然として年率約7％で推移している。
Chart I-2
ソフトデータがはるかに悪い
ソフトデータははるかに悪化している
ソフトデータははるかに悪化している
Chart I-3
国内需要は堅調に持ちこたえている
国内需要は堅調に推移している
国内需要は堅調に推移している
スウェーデンの失業率の上昇は問題だが、我々はこれが労働市場のダイナミクスに重大な変化をもたらしたとは考えていない。スウェーデンは多くの他の欧州諸国よりも亡命希望者や難民に対して開放的である歴史が長い。数年前のシリア危機は例外的な急増を引き起こし、亡命希望者数は15万人を超え、総人口のほぼ1.5％にまで達した（Chart I-4）。歴史的に移民はスウェーデンに大きな労働力の恩恵をもたらし、成長は米国やユーロ圏を上回ってきた。ただし、新たな移民が労働力に統合される過程で摩擦的失業も生じている。
Chart I-4
統合される必要のある新たな労働力プール
統合しなければならない新たな労働力のプール
統合しなければならない新たな労働力のプール
外国生まれの労働者は現在総人口の約20％を占め、その大部分が新しい言語を学び新たなスキルを習得する必要がある（Chart I-5A）。この成長のメリットは今後何年にもわたって享受されるだろう。統合は政治的に敏感な問題であり、2016年中頃に採択された高度に制限的な亡命・再統合法は移民ブームの後退を意味する可能性が高い。2018年9月の選挙で反移民派のスウェーデン民主党が台頭したのはその典型例だ。しかし、民主主義国の有権者が右寄りに向かう動きは世界的な現象であり、相対的に見ればスウェーデンにとってそれほどネガティブではない。つまり、ほとんどの先進国と比較して、スウェーデンの人口見通しは依然として比較的良好だ（Chart I-5B）。
Chart I-5A
巨大な労働力の恩恵
巨額の労働配当
巨額の労働配当
Chart I-5B
明らかな人口の崖は見えない
明らかな人口の崖は見られない
明らかな人口の崖は見られない
移民の流入はインフレに対して混合的な影響を与える。賃金が低い就業比率の上昇により賃金を押し下げる圧力がある一方で、労働者数の増加に応じて住宅と消費には上押し圧力が掛かる。これは政府が社会サービスに支出を増やす財政刺激にもつながる。一方で、外国生まれの人々の失業率は約15％に達している。これはフィリップス曲線が最初の数年間は平坦で、その後急勾配になることを意味する。しかし新たな労働力が最終的に経済に吸収されれば、賃金圧力を生み出し始めるはずだ。
リクスバンクはこれらのダイナミクスを明確に理解しており、だからこそ過去数年はスウェーデン経済が比較的持ちこたえている局面でもハト派の姿勢を取ってきた。金利は2015年にマイナス領域に引き下げられ、2016年から2017年の世界的な回復期を通じて-0.5％に据え置かれた（ECBの政策金利より低い）。また量的緩和はECBの資産購入プログラムの再開発表よりも早く2020年まで延長された。これらは弱い通貨を通じて含め、スウェーデンの金融状況を大いに緩和した。今後、クローナの下値抵抗が薄く上昇しやすいと考える主要な理由がいくつかある：
弱いクローナは通常12か月のラグをもって製造業を助けてきた。
弱いクローナは通常12か月のラグをもって製造業を助けてきた。マイナスの乖離は深刻な不況の前にしか起こらない傾向がある。現在がまさにそのような状況でない限り、比較的安価になったスウェーデン製品（ボルボ対BMWを想起せよ）への需要が強まれば、クローナは強含みになるはずだ（Chart I-6）。
確かにRiskbankは量的緩和を実施してきたが、バランスシートの拡大ペースはここ数四半期で鈍化している。USD/SEKはリクスバンクとフェドの相対的なバランスシート動向を追う傾向があるが、クローナに有利な大きな差が開きつつある（Chart I-7）。一方で、フェドがバランスシートを再拡大しようとしていることも、USDに対してSEKを強める方向に働くはずだ。
Chart I-6
スウェーデンクローナと製造業
スウェーデン・クローナと製造業
スウェーデン・クローナと製造業
Chart I-7
USD/SEKと相対的バランスシート
USD/SEKと相対的バランスシート
USD/SEKと相対的バランスシート
スウェーデンの住宅市場はリクスバンクにとって悩みの種になりつつある。2015年にマイナス金利が導入された際、住宅価格は前年比で15％という急上昇を見せた（Chart I-8）。最近では移民抑制がある程度の冷却をもたらしたが、スウェーデンの家計のレバレッジは依然として非常に高い。1990年代の住宅危機の記憶が鮮明なため、現行の政策スタンスにリクスバンクは強い違和感を抱いている。
キャリーコストは米ドルをショートするよりNZDをショートする方が低い。
我々のバイアスは、ステファン・イングベス総裁ができるだけ速やかに政策を正常化したがっている一方で、彼が扱っているのは貿易がGDPの約45％を占める小規模開放経済であり、外部条件に翻弄されやすいという点だ。SEKはG10の中で最も割安な通貨であり、世界成長の底打ちを示すいかなる弱い証拠に対しても急反発する可能性がある。さらに、世界的な成長が上向けば資源利用がひっ迫し、スウェーデンの基調的なインフレ圧力が高まるはずだ（Chart I-9）。
Chart I-8
スウェーデンの住宅価格##br## バブル気味
スウェーデンの住宅価格はバブル状態にある
スウェーデンの住宅価格はバブル状態にある
Chart I-9
スウェーデンの資源利用とインフレ
スウェーデンにおける資源の活用とインフレ
スウェーデンにおける資源の活用とインフレ
SEKの取引ストラテジーに関しては、USD/SEKとNZD/SEKは高い相関を示す傾向にある。SEKはキウイよりも世界成長に対するベータが高い（スウェーデンはGDPの45％を輸出、ニュージーランドは27％）。相対的に見ると、スウェーデン経済は米国よりも底打ちしているように見え、SEK/NZDはUSD/SEKの下落をプレーする魅力的な手段だ。一方、キャリーコストは米ドルをショートするよりもNZDをショートする方が低い（Chart I-10）。EUR/SEKについては、当面現水準で推移したのち下落に向かう可能性があるが、最終的には世界成長が再加速するとピークを打つだろう。
Chart I-10
SEK/NZDはロングを維持
SEK/NZDのロングを維持
SEK/NZDのロングを維持
結論：我々は相対価値プレーとしてSEK/NZDを引き続きロングしているが、真の上昇余地はSEK/USDクロスにある。ソフトデータの失望に市場が注目していることがSEK安の主因である一方、ハードデータは比較的耐性を示しているというのが我々の見方だ。調査が示すほど世界成長環境が危うくないことが明確になれば、クローナは急反発する可能性がある。
事務連絡
我々のGBP/JPYロングは今週5%の含み益となった。利益を守るためストップを138に引き締める。EUR/NOKショートは2%の損失でロスカットされた。現時点では様子見である。EUR/NOKは現在2008年のリセッション時の水準を上回っており、それは長期化した景気後退のみで正当化されうるが、リスク管理の観点からは当面忍耐が必要だ。続報を待たれたい。
チェスター・ントニフォア, 外国為替ストラテジスト chestern@bcaresearch.com
脚注
1 詳細はForeign Exchange ストラテジー 週次レポート、題名「マネー回転率、EUR/USD、そして銀」（2019年10月11日付）を参照。fes.bcaresearch.comで入手可能
通貨
米ドル
Chart II-1
USDテクニカル 1
USD テクニカル 1
USD テクニカル 1
Chart II-2
USDテクニカル 2
米ドルテクニカル 2
米ドルテクニカル 2
米国の最近のデータは軟調である：
9月の小売売上高は前月比-0.3％。鉱工業生産は前月比-0.4％。
9月の輸出物価・輸入物価はともに前年比-1.6％下落。
ミシガン消費者信頼感指数は10月に96まで上昇、前月の93.2から上昇。
NYエンパイア・ステート製造業指数は10月に4に上昇、9月の2から。
9月の建築許可と住宅着工はそれぞれ前月比-2.7％、-9.4％と減少したが、住宅回復は維持されている。
10月11日終了週の新規失業保険申請件数は214Kに増加。
DXY指数は今週0.7％下落した。最新のベージュブックは米経済が緩やか〜中程度のペースで拡大しているとまとめた。製造業の減速は依然として最大のリスクであり、貿易摩擦は企業心理と設備投資意向に重しをかけ続けている。最近の貿易協議における“合意”は、夏を通じて続いてきた高い不確実性からの転換点を示す可能性がある。
レポートリンク：
マネー回転率、EUR/USD、そして銀 - 2019年10月11日
暴動ポイントにおける資本保全 - 2019年9月6日
通貨の風景は変わったか？ - 2019年8月16日
ユーロ
Chart II-3
EURテクニカル 1
EUR テクニカル分析 1
EUR テクニカル分析 1
Chart II-4
EURテクニカル 2
EURのテクニカル分析 2
EURのテクニカル分析 2
ユーロ圏の最近のデータは低調のままである：
9月の総合インフレ率は前年比0.8％に低下し、約3年ぶりの低水準となった。ただしコアインフレは前年比1％に上昇した。
ユーロ圏の鉱工業生産は8月に前年比-2.8％と引き続き縮小した。
ユーロ圏のZEW景況感は10月にさらに低下し-23.5となったが、これは予想の-33を大きく上回る。ドイツのZEW期待指数も10月に-22.8に低下した。期待は現状に比べて改善している点は注目に値する。
ユーロ圏の貿易収支は8月に203億ユーロに改善、7月の下方改定された175億ユーロから上昇した。ただしこれは主に輸入の縮小によるものだ。
EUR/USDは今週0.9％上昇し、広範なドル安が一因となった。ユーロ圏の貿易動向は依然憂慮すべきで、8月の輸出は前年比-2.2％、輸入は前年比-4.1％と大きく落ち込んだ。注目すべきは、年初来で対米のEUの貿易黒字が1年前の910億ユーロから1030億ユーロに拡大する一方、中国との貿易赤字は1160億ユーロから1270億ユーロにさらに拡大している点だ。
レポートリンク：
マネー回転率、EUR/USD、そして銀 - 2019年10月11日
いくつかのトレードアイデア - 2019年9月27日
中央銀行の対決 - 2019年6月21日
日本円
Chart II-5
JPYテクニカル 1
JPYのテクニカル分析 1
JPYのテクニカル分析 1
Chart II-6
JPYテクニカル 2
JPY テクニカル指標 2
JPY テクニカル指標 2
日本の最近のデータは引き続き失望的である：
8月の鉱工業生産は前年比-4.7％。
8月の稼働率は前月比-2.9％低下。
日本円は今週対米ドルで0.8％下落した。黒田総裁は経済状況がさらに悪化し続ければ躊躇なく行動すると改めて強調した。一方で、フェドやECBが資産買入を通じてバランスシートを拡大する方向にある中で、日銀がイールドカーブコントロールを超えてどれだけ追加で打ち手を講じられるかは不透明である。我々は日銀が攻撃的に動くには「リーマン級の瞬間」が必要だと考えており、円をロングで保有している。
レポートリンク：
いくつかのトレードアイデア - 2019年9月27日
通貨の風景は変わったか？ - 2019年8月16日
薄い夏場の取引に向けたポートフォリオ調整 - 2019年7月5日
英ポンド
Chart II-7
GBPテクニカル 1
GBP テクニカル指標 1
GBP テクニカル指標 1
Chart II-8
GBPテクニカル 2
GBP テクニカル分析 2
GBP テクニカル分析 2
英国の最近のデータは概ねネガティブである：
ILO失業率は8月にわずかに上昇して3.9％に。平均賃金の四半期成長率は3.8％に鈍化したが、予想の3.7％を上回った。
小売物価指数は9月に前年比2.4％と、前月の2.6％から減速。
総合インフレ率は9月に前年比1.7％で横ばい、コアインフレは1.5％から1.7％に上昇。
小売売上高は9月に前年比3.1％増、前月の2.6％から上昇。
GBP/USDは欧州理事会のブレグジットに関する楽観が高まったことで今週3.3％急騰した。バリュエーションの観点からは、ポンドはそのフェアバリューに対して大きく割安で取引されている。ブレグジットに関するポジティブなニュースが続けば、ポンドはさらに上昇し得る。我々はGBP/JPYをロングしており含み益は5％超。ストップを138に引き上げる。
レポートリンク：
いくつかのトレードアイデア - 2019年9月27日
英国：循環的減速か構造的停滞か？ - 2019年9月20日
中央銀行の対決 - 2019年6月21日
豪ドル
Chart II-9
AUDテクニカル 1
AUD テクニカル 1
AUD テクニカル 1
Chart II-10
AUDテクニカル 2
AUD テクニカル分析 2
AUD テクニカル分析 2
豪州の最近のデータは穏やかである：
NAB企業景況感はさらに-2に低下したが、Q3の活動状況は1に改善した。
労働市場では9月の失業率が5.2％に低下。14.7Kの雇用が創出され、うち26.2Kがフルタイム、11.4Kがパートタイムの減少だった。
AUD/USDは今週0.4％上昇した。今週初めにRBA議事録が公表されたが、低金利の効果について鋭い論争が示されている。一方では低金利は完全雇用とインフレ目標達成のため理論的に正当化される。だが他方で、一部のRBAメンバーは低金利が既に高騰している住宅価格をさらに煽ることを懸念している。したがってRBA議事録後、追加利下げの確率は低下した。
レポートリンク：
豪ドルに関するコントラリアンの見解 - 2019年5月24日
限界効用逓減に注意 - 2019年4月19日
まだ安全圏を脱していない - 2019年4月5日
NZドル
Chart II-11
NZDテクニカル 1
NZD テクニカル分析 1
NZD テクニカル分析 1
Chart II-12
NZDテクニカル 2
NZドルのテクニカル分析 2
NZドルのテクニカル分析 2
ニュージーランドの最近のデータはネガティブである：
観光客到着数は8月に前年比1.8％増と、前月の2％からわずかに低下。
第3四半期の総合インフレ率は前年比1.5％に鈍化。
NZD/USDは今週ほぼ横ばいで推移した。世界成長に密接に結びつくニュージーランドドルは米中貿易の見出しの浮き沈みに伴って変動している。両国は先週部分合意に達したが、詳細はまだあいまいだ。キウイはハイベータ通貨である一方、クロスではアンダーパフォームするはずだ。我々は引き続きオーストラリアドルとスウェーデンクローナを通じてキウイの弱さをプレーしている。
レポートリンク：
USD/CNYと市場の動揺 - 2019年8月9日
米ドルは次にどこへ向かうか？ - 2019年6月7日
まだ安全圏を脱していない - 2019年4月5日
カナダドル
Chart II-13
CADテクニカル 1
CADのテクニカル分析 1
CADのテクニカル分析 1
Chart II-14
CADテクニカル 2
CADのテクニカル 2
CADのテクニカル 2
カナダの最近のデータは比較的強い：
9月の失業率はさらに低下し5.5％に。さらに平均時給は前年比4.3％の伸びを続け、前月の3.8％から加速した。最後に9月の雇用者数は53.7Kの増加で、予想の10Kを大きく上回った。
9月の総合インフレ率とコアインフレ率はともに前年比1.9％で横ばいだった。
カナダドルは先週公表された好調な雇用データを受けて対米ドルで1％の上昇となった。今月の総選挙はカナダのエネルギーセクターと環境政策の将来にとって重要となり得る。
レポートリンク：
暴動ポイントにおける資本保全 - 2019年9月6日
薄い夏場の取引に向けたポートフォリオ調整 - 2019年7月5日
金、原油、暗号通貨について - 2019年6月28日
スイスフラン
Chart II-15
CHFテクニカル 1
CHF テクニカル分析 1
CHF テクニカル分析 1
Chart II-16
CHFテクニカル 2
CHF テクニカル 2
CHF テクニカル 2
スイスの最近のデータは良好である：
貿易黒字（貴金属除く）は9月に急拡大し28.8億CHFとなった。特に化学・製薬製品の販売増によりスイスの輸出は月次で8.2％増の203億CHFとなった。輸入は月次で1.4％減の174億CHFだった。
生産者物価と輸入物価は9月に前年比-2％のまま推移した。
USD/CHFは今週1％下落した。スイスフランは防御的通貨としての性格と、SNBによる操作ツールとしての性格の綱引きにさらされ続けるだろう。我々の推定ではEUR/CHF1.06が究極のストレスポイントである。グローバルポートフォリオは構造的にアウトパフォームするという単純な理由からスイスフランを保険として保有すべきだ。
レポートリンク：
SNBに関する注記 - 2019年10月4日
スイスフランへの対処法 - 2019年5月17日
限界効用逓減に注意 - 2019年4月19日
ノルウェークローネ
Chart II-17
NOKテクニカル 1
NOKのテクニカル指標 1
NOKのテクニカル指標 1
Chart II-18
NOKテクニカル 2
NOK テクニカル 2
NOK テクニカル 2
ノルウェーの最近のデータは低迷している：
貿易収支は9月に12億NOKの赤字に転じた。これは前年比で240億NOKの減少である。
ノルウェークローネは今週対米ドルでほぼ1％下落した。エネルギー価格はここ数週間低迷している。さらにノルウェーの貿易収支は2017年11月以来初めて赤字に転じた。輸出はエネルギー製品の販売減により前年比-19.5％と急落し、一方で輸入は前年比+12.9％と増加した。メッセージは明確だ――ノルウェーは国内的には比較的堅調だが、石油輸出への依存が成長見通しにボラティリティをもたらしている。BCAは2019年の原油価格見通しを引き下げており、これがノルウェークローネの魅力をそいでいる。続報にご期待ください。
レポートリンク：
いくつかのトレードアイデア - 2019年9月27日
薄い夏場の取引に向けたポートフォリオ調整 - 2019年7月5日
金、原油、暗号通貨について - 2019年6月28日
スウェーデンクローナ
Chart II-19
SEKテクニカル 1
SEK テクニカル 1
SEK テクニカル 1
Chart II-20
SEKテクニカル 2
SEK テクニカル 2
SEK テクニカル 2
スウェーデンの最近のデータは中立的である：
9月の失業率は7.1％で横ばいだった。
USD/SEKは今週1.1％下落した。今年に入って最もパフォーマンスが悪いG10通貨として、スウェーデンクローナは現在そのフェアバリューに対して大きく割安に取引されている。今週の本文前半でスウェーデン経済とクローナに関する詳細分析を提示しているので参照されたい。
レポートリンク：
米ドルは次にどこへ向かうか？ - 2019年6月7日
G10全体の国際収支 - 2019年2月15日
通貨の単純な魅力度ランキング - 2019年2月8日
トレード＆予測
予測サマリー
コアポートフォリオ
タクティカルトレード
指値注文
決済済み取引
ハイライト
中国の経済活動は減速のペースが緩やかになっているが、まだ底打ちしていない。
9月のPMIは上振れサプライズとなり、先月に活動が改善したことを示唆している。ただし、PMIは（今年の初めにそうであったように）誤ったシグナルを出すことがある。
したがって、投資家は中国経済が底打ちしたと結論付ける前に、「ハードデータ」の改善のより明確な兆候を待つべきである。
投資家は中国株に対して景気循環的にオーバーウェイトの姿勢を維持すべきである。「ハードデータ」の明確な改善が確認されればタクティカルな姿勢（アンダーウェイトからの上方修正）を行う可能性があるが、現時点ではごく短期ではリスクが潜在的利益を上回る。
特集
表1 と 表2 は、過去１か月間における中国の経済及び金融市場の主要な動向を示している。成長面では、中国の経済活動は減速のペースが緩やかになっているように見えるが、まだ底打ちしていない。中国の9月の製造業PMIは上振れサプライズとなり、当社のチャイナ・アクティビティ・インデックスの次回更新が大幅に改善する確率が高まったことは正当に評価されるべきである。ただし、カイシン製造業PMIの類似の反発が年初に短期間で反転し、実際の活動に意味のある影響をもたらさなかったことを投資家は思い出すべきである。結論として、投資家は中国の景気循環が上向きに転じ始めたと結論付ける前に、「ハードデータ」のより明確な改善の兆候を待つべきである。
表1
中国マクロデータ概要
中国マクロ・マーケットレビュー
中国マクロ・マーケットレビュー
表2
中国金融市場パフォーマンス概要
中国マクロおよびマーケットレビュー
中国マクロおよびマーケットレビュー
投資ストラテジーの観点から、我々は引き続き循環的にオーバーウェイトの姿勢を維持することを推奨する。循環的な見方を支えるシナリオは二つ考えられる：一つは中国の既存のリフレーション努力が早期に成功して経済活動を安定化させる場合、もう一つは政策当局がさらに刺激を強化せざるを得ない場合である。いずれのケースでも、12か月後には中国の相対パフォーマンス（世界株式に対して）が高くなる確率は高いと見ている。
タクティカルには、貿易戦争のさらなる激化の可能性が依然として高いこと、そして中国の活動がまだ決定的に底を打っていないことから慎重な姿勢を維持している。マネーとクレジット成長の大幅な再加速、実質的な中国経済活動の改善の証拠（すなわち「ハードデータ」の改善）、あるいは米中間で関税の大部分または全部を撤廃する合意が成立すれば、我々のタクティカルな姿勢を引き上げる触媒となる可能性が高い。現時点では、短期的にはリスクが潜在的利益を上回ると考えている。
図1
中国の経済活動は緩やかなペースで引き続き減少している
中国の経済活動は引き続き減少しているが、減少のペースは鈍化している
中国の経済活動は引き続き減少しているが、減少のペースは鈍化している
表1および表2に関連して、以下に中国のマクロおよび金融市場データの動向に関する詳細な観察点をいくつか示す：
ブルームバーグ李克強指数は8月にわずかに上昇したが、明確な下落トレンドの中にとどまっている。図1は、李克強指数の要素を取り入れたより広い同時指標である当社のBCAチャイナ・アクティビティ・インデックスが弱含みであり、8月に引き続き低下したことを示している。要するに、中国の経済活動は減速のペースが緩やかになっているが、まだ決定的に底打ちしていない。
李克強指数の先行指標は、特に金融条件とマネーサプライ（M3を中心とした要素）によって牽引され、8月にわずかに上昇した。しかし、与信（クレジット）構成要素は前月比で低下し、全体の指数に重しとなった。指標の月次変動を切り離して見ると、図2は金融緩和の度合いとクレジット及びマネー供給の成長との間に依然として大きなギャップが存在することを浮き彫りにしている。投資家は後者（クレジットとマネー供給）の決定的な持ち直しに特に注視すべきであり、これは中国のリフレーション努力が内需を押し上げることに成功した明確なサインとなるだろう。
図2
金融条件とマネー＆クレジットの間のギャップは依然として大きい
金融環境とマネー＆クレジットの間のギャップは依然として大きい
金融環境とマネー＆クレジットの間のギャップは依然として大きい
中国の住宅データは8月も概して減速したが、販売床面積（販売面積）は縮小が止まった点が例外であった。住宅価格の上昇率は鈍化しており、当社のディフュージョン指数は今後さらに緩やかな上昇ペースを示唆している。ここ数か月の建設の急激な減速の後、販売量のわずかな再加速は着工床面積と販売床面積の間に以前あった巨大なギャップを実質的に解消した。我々は以前のレポートで、このギャップは最終的に着工の鈍化によって縮小する可能性が高いと主張してきた。というのは、強い建設活動は最終的に強い販売によって裏付けられる必要があるためである。販売の増加は中国の住宅市場のファンダメンタルズが非常に初期段階で安定化しつつある可能性を示唆しているが、これを確証するためには高い一桁台への持続的な上昇が必要である。
中国の9月の製造業PMIは上振れサプライズとなり、特に民間セクターに重きを置くカイシンPMIが顕著であった。各PMIの構成要素は相反するストーリーを伝えている；カイシンPMIは総新規受注が輸出新規受注を上回ったと報告しており（国内需要の強さを示唆）、一方で公式PMIは輸出新規受注の改善が輸入および全体の新規受注コンポーネントに比べてはるかに強い改善を示している。PMIの改善が9月の当社のチャイナ・アクティビティ・インデックスの実質的な上昇を示唆している可能性はあるが、投資家はこれが持続的な経済活動の底打ちを保証するものではないことを認識すべきである。例えば、年初にカイシン製造業PMIの類似の反発は急速に反転し、実際の活動には意味のある影響を与えなかった（図3）。結論として、投資家は中国の景気循環が上向きに転じ始めたと結論付ける前に、「ハードデータ」のより明確な改善の兆候を待つべきである。
図3
PMIの改善は経済改善の保証にはならない
PMIが改善しても、経済が改善するとは限らない
PMIが改善しても、経済が改善するとは限らない
米ドル建てでは、中国の株式市場（投資可能株および内需向けの国内株）は過去1か月で絶対値では横ばいとなったが、グローバル株式に対しては1〜2％のアンダーパフォームとなった。過去1週間では、投資可能株はトランプ政権が中国企業を米国の証券取引所から上場廃止することを検討しているという報道の影響を特に受けた。政権当局者はその報道を否定しているが、仮に上場廃止が実行されたとしても、米国から香港への上場移転は6〜12か月の時間軸におけるこれら企業の収益見通しを変える可能性は非常に低い。上場廃止イベントに対する短期的な売りは十分にあり得るが、政権が米国による中国証券の保有を完全に禁止する方向に動いて成功しない限り、我々の循環的な姿勢に影響を与える可能性は低いだろう。
過去1か月で、投資可能市場および国内市場の両方で中国の金融、テクノロジー、通信サービス企業がアウトパフォームしており、投資可能市場ではエネルギー、素材、資本財もアウトパフォームしている。投資可能なエネルギー株のアウトパフォームは、中旬に発生したアラムコの石油処理施設への攻撃に明確に関連しているが、その後ブレント原油価格は攻撃前の水準へ戻っている。我々は過去1年にわたり中国のエネルギー株に対して絶対的なロングポジションを維持してきたが、結果は期待外れであった（2018年10月3日の建玉以降でポジションは28%下落している）。それでも、我々は景気循環の期間ではバリューの観点から中国のエネルギー株を引き続き好むことを推奨する：このセクターはグローバルのエネルギー株や世界の石油生産と比べて割安である（図4）。さらに、BCAのコモディティ＆エネルギー戦略サービスは、来年ブレント原油価格が平均で1バレル74ドルで推移すると予測しており（現在の価格より1バレルあたり12ドル高い）、今後6〜12か月でバリューが触媒となる可能性を示唆している。
図4
中国のエネルギー株はめったにこれほど割安になっていなかった
中国のエネルギー株はめったにここまで安くならなかった
中国のエネルギー株はめったにここまで安くならなかった
図5
安定した不動産パフォーマンスは住宅市場の安定を予測しているか？
不動産の安定したパフォーマンスは住宅市場の安定を予測しているか？
不動産の安定したパフォーマンスは住宅市場の安定を予測しているか？
今夏に始まった投資可能な不動産セクターのアンダーパフォームは、上で指摘した住宅価格上昇率と住宅建設の減速を予期した形で起きたように見える。これは注目に値するもので、9月初め以降不動産の相対パフォーマンスは安定しているように見える（図5）。示唆されるところは、不動産株は中国の住宅市場の安定化を織り込もうとしている可能性があり、これが中国の内需が近く持続的に底打ちする確率を高めるだろうということである。現時点では、不動産株の下落が止まったと自信をもって予想するには時期尚早であるが、相対パフォーマンストレンドは今後数週間注視に値する。
中国のインターバンク金利と国債利回りは、変動の大きい7日物インターバンクレポ金利（上昇）を除いて、過去1か月で概ね横ばいで推移している。中国の国債利回りの年初来の相対的な安定は、米国の10年物国債利回りの急落（図6）と鮮明な対照をなしており、これは（部分的には）中国当局がこれ以上大幅に緩和することに消極的であることを反映している。
過去1か月でオンショアの中国コーポレート債市場に大きな変化は見られず、全体としてオンショア社債スプレッドは横ばい傾向を続けている。低格付けのスプレッドは6月上旬以降やや拡大しているが、格付けAAおよびAA-の債券は引き続きオンショア社債市場の集計値をアウトパフォームしている（図7）。投資家はヘッジされた通貨建てでオンショア社債を保有し続けるべきである。
図6
利回りの乖離は中国当局の慎重さを反映している
債券利回りの乖離は中国の政策立案者の消極的な姿勢を反映している
債券利回りの乖離は中国の政策立案者の消極的な姿勢を反映している
図7
ヘッジ通貨建てでオンショア社債を保有する
中国オンショア・コーポレートボンドをヘッジ建てで保有する
中国オンショア・コーポレートボンドをヘッジ建てで保有する
人民元は過去1か月で対米ドルで約0.1%上昇し、対ユーロでは約1.1%上昇した。後者は主にユーロの弱さを反映しており、人民元の大幅な強さを示すわけではないが、中国の通貨が貿易協議に関連する動きによって動かされていることは明らかである。来週末に開始される予定の協議が再び激化につながる場合、USD-CNHはさらに大幅に上昇すると投資家は予想すべきである。逆に、米中間で関税の大部分または全部を撤廃する合意が成立すれば、人民元は大幅に上昇するだろう。
Jonathan LaBerge, CFA, バイスプレジデント スペシャルレポート jonathanl@bcaresearch.com Jing Sima 中国ストラテジスト jings@bcaresearch.com
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