Monthly Archives:

November 2014

China research trip – A look at the Chinese property market and shadow banking sector

There is a lot of debate surrounding the future of China’s economy. There are the pessimists, who will cite the inevitable collapse of a debt-powered housing bubble.  There are others that say these concerns are overblown and that despite slowing, China is still the world’s second largest economy and its growth rate is far superior than anything seen in the developed world.

From time to time we…

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EM corporate bonds: spreads are attractive compared to developed markets

Emerging market (“EM”) corporate bonds are a fast-growing segment of the fixed income market. The hard-currency (USD, EUR, GBP and CHF) EM bond market has doubled in size since 2010 and is now worth over $1.3 trillion – which makes it as big as the US high-yield market. Including local-currency bonds, the Bank of International Settlements estimated that the EM corporate bond market was worth ne…

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Mini Bonds – who is buying them?

One of the many unintended consequences of structurally low interest rates over the past few years has been the emergence of mini-bonds in the UK. These are typically non-tradable debt instruments issued by companies directly to individual investors*. We’ve commented before on one such bond issued by Chilango, a London based vendor of Mexican food, and highlighted some of the risks relative to …

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“A grip on the public finances”. Redeeming war loans as UK borrowing rises.

As you know, we’ve always been fascinated by the UK’s War Loans and have written about them repeatedly on this blog (here’s what we wrote in 2011 when we suggested that they should be redeemed). Bonds and war go together hand in hand, and for most of history rising government debt levels have been directly caused by the cost of financing conflicts, or the reparations afterwards. The several out…

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Two devils in the US inflation detail

US inflation has been surprisingly low for a few months after a peak in May 2014. According to the latest data released in September, core CPI (i.e. excluding food & energy) stands at just 1.7% with much of this weakness caused by declining goods prices. According to the US Bureau of Labor Statistics (BLS) the average price of imports, excluding fuel, has not increased in six months. A stronger…

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