McVEAN Trading & Investments, LLC
OUTLOOK FOR CHINA February 20, 2017
GIC IN SINGAPORE Michael Drury Chief Economist McVean Trading and Investments, LLC
Past Performance Is Not Necessarily Indicative Of Future Results.
0
US, EUROPE, JAPAN PMI 3 MONTH AVERAGE
60
80.00
55
65.00
50
50.00
45
35.00
40
20.00
35
5.00
30 1/1/2006
-10.00 1/1/2007
1/1/2008
1/1/2009
1/1/2010
1/1/2011 Eurozone
1/1/2012 US
1/1/2013
1/1/2014
JAPAN (RS)
Past Performance Is Not Necessarily Indicative Of Future Results.
1/1/2015
1/1/2016
1/1/2017
Dec-16 1
US, EUROPE, JAPAN, CHINA PMI 3 MONTH AVERAGE
60
80.00
55
65.00
50
50.00
45
35.00
40
20.00
35
5.00
30 1/1/2006
-10.00 1/1/2007
1/1/2008
1/1/2009
1/1/2010 CHINA
1/1/2011
1/1/2012
Eurozone
US
1/1/2013
1/1/2014
JAPAN (RS)
Past Performance Is Not Necessarily Indicative Of Future Results.
1/1/2015
1/1/2016
1/1/2017
Dec-16 2
CHINESE GDP
CURRENT QUARTER % CHANGE FROM YEAR AGO 25.0%
23.0%
21.0%
19.0%
17.0%
15.0%
13.0%
11.0%
9.0%
7.0%
5.0% 3/1/2000
3/1/2002
3/1/2004
3/1/2006
3/1/2008 REAL
3/1/2010
NOMINAL
Past Performance Is Not Necessarily Indicative Of Future Results.
3/1/2012
3/1/2014
3/1/2016
Q4 2016 3
CHINA GDP GROWTH
CURRENT QUARTER %CH FROM YEAR AGO 15.0
15.0
12.5
10.0
10.0
5.0
7.5
0.0
5.0 Mar-02
-5.0 Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
REAL GDP (LHS)
Mar-10
Mar-11
Mar-12
GDP DEFLATOR (RHS)
Past Performance Is Not Necessarily Indicative Of Future Results.
Mar-13
Mar-14
Mar-15
Mar-16 Q3 2016
4
CHINESE NOMINAL GROWTH VS PPI PERCENT CHANGE FROM A YEAR AGO
10.0%
25.0%
8.0%
22.5%
6.0%
20.0%
4.0%
17.5%
2.0%
15.0%
0.0%
12.5%
-2.0%
10.0%
-4.0%
7.5%
-6.0%
5.0%
-8.0% Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
2.5%
PPI
NOMINAL GDP
Past Performance Is Not Necessarily Indicative Of Future Results.
Q4 16 5
CHINESE NOMINAL GDP BY SECTOR
3 MONTH AVERAGE % CHANGE FROM YEAR AGO
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0% Jan-99
Jan-01
Jan-03
Jan-05
Jan-07
PRIMARY & SECONDARY
Jan-09
Jan-11 TERTIARY
Past Performance Is Not Necessarily Indicative Of Future Results.
Jan-13
Jan-15
Q4 2016 6
CHINA MARKIT PMI: MANUFACTURING VS SERVICES 55
54
53
52
51
50
49
48
47 4/1/2014
10/1/2014
4/1/2015 MANUFACTURING
10/1/2015 SERVICES
Past Performance Is Not Necessarily Indicative Of Future Results.
4/1/2016
10/1/2016
Dec 16 7
CHINESE RAILROAD FREIGHT VS ELECTRICITY PRODUCTION 3 MONTH AVERAGE % CHANGE FROM YEAR AGO 3 MONTH AVERAGE
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
RAIL
ELECTRICITY PRODUCTION
Past Performance Is Not Necessarily Indicative Of Future Results.
Dec 2016 8
POLICY LEVERS
• 1) Monetary Policy - Lower Interest Rates & Reserve Requirements
• 2) Fiscal Policy – Infrastructure Spending • 3) Regulation – Reform & Open Markets • 4) Exchange Rates – Managing Yuan Past Performance Is Not Necessarily Indicative Of Future Results.
9
CHINESE YUAN IN US DOLLARS 0.17
0.165
0.16
0.155
0.15
0.145
0.14
0.135
0.13
0.125
0.12
Jan 2017 Past Performance Is Not Necessarily Indicative Of Future Results.
10
CHINA NOMINAL GDP GROWTH IN US$ CURRENT QUARTER % CHANGE FROM YEAR AGO
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0% Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Q4 16 Past Performance Is Not Necessarily Indicative Of Future Results.
11
CRUDE OIL MONTHLY
160
140
120
100
80
60
40
20
Jan 17 Past Performance Is Not Necessarily Indicative Of Future Results.
12
CORN VS COPPER 850
500
450 750 400 650 350
550
300
250
450
200 350 150 250 100
150
50
Corn
Copper
Past Performance Is Not Necessarily Indicative Of Future Results.
Jan-17 13
CHINA FISCAL BALANCE AS A % OF GDP 4 QTR AVERAGE
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0% 1/1/2000
1/1/2002
1/1/2004
1/1/2006
1/1/2008
1/1/2010
1/1/2012
1/1/2014
1/1/2016
Q4 2016 Past Performance Is Not Necessarily Indicative Of Future Results.
14
CHINA TOTAL AMOUNT OF SOCIAL FINANCING 12 MONTH AVERAGE
1600
1400
1200
1000
800
600
400
200
0 2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Dec 16 Past Performance Is Not Necessarily Indicative Of Future Results.
15
REAL ESTATE IN CHINA Sales of Commercial Buildings in 2016 For Eastern, Central and Western Regions Floor Space of Commercial Buildings Sold Regions
National Total Eastern Central Western
Share of Production 100.0% 46.3% 29.3% 24.3%
Growth Rate Y/Y (%)
Sales of Commercial Buildings Share of Value Sold
22.5 22.7 28.4 15.6
Growth Rate Y/Y (%)
Price Appreciation
34.8 38.7 38.7 18.3
10.4% 13.0% 8.0% 2.3%
100.0% 64.1% 19.9% 16.1%
Real Estate Investment in 2016 For Eastern, Central and Western Regions
Regions
National Total Eastern Central Western
Investment Share
100.0% 54.8% 22.7% 22.4%
% of Investment in Residential Buildings 67.0% 67.4% 69.6% 63.3%
Growth Rate Y/Y (%)
6.9 5.6 10.7 6.2
Past Performance Is Not Necessarily Indicative Of Future Results.
Residential Buildings 6.4 6.3 9.9 2.9
16
PASSENGER CAR SALES IN CHINA
MILLIONS OF UNITS SEASONALLY ADJUSTED ANNUAL RATE
30.0
28.0
26.0
24.0
22.0
20.0
18.0
16.0
14.0
12.0
10.0 Sep-11
Sep-12
Sep-13
Sep-14 MONTHLY
12 MO EMA
Past Performance Is Not Necessarily Indicative Of Future Results.
Sep-15
Sep-16
Dec-16 17
CHINA EXPORTS VS IMPORTS
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO 66.0%
49.5%
33.0%
16.5%
0.0%
-16.5%
-33.0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 EXPORTS
IMPORTS
Past Performance Is Not Necessarily Indicative Of Future Results.
Dec-16 18
CHINESE TRADE SURPLUS
BILLIONS OF DOLLARS SAAR – 3 MONTH AVERAGE 900.0
800.0
700.0
600.0
500.0
400.0
300.0
200.0
100.0
0.0
-100.0
Dec-16 Past Performance Is Not Necessarily Indicative Of Future Results.
19
CHINESE $ IMPORTS VS FX RESERVES BILLIONS OF DOLLARS
2,250
4500
2,050 4000 1,850 3500 1,650 3000 1,450
1,250
2500
1,050 2000 850 1500 650 1000 450
250 Jan-05
500 Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
IMPORTS (6 MO AVG)
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
CURRENT FX RESERVES
Past Performance Is Not Necessarily Indicative Of Future Results.
20