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About Tim

China

+25 year(s) experience

Tim Cheung, Head of China products, IGM, headshot
Tim Cheung heads up IGM’s China products, keeping screens updated with the latest trading strategies, often adopted by hedge funds and institutional investors.

Since 2000, he has been working with IGM to develop a range of Chinese language products for mainland China and Hong Kong. In his current role, he’s responsible for all the China content including IGM's Chinese language services. He provides key insight on the CNH/CNY markets as well as flow commentary on the emerging Asian FX market and Asian credit.

Tim joined us in Hong Kong in 1995 from MMS International. Before that he worked in the banking sector.

Tim has a bachelor’s degree in economics from Wolverhampton University.

Analyst Articles

Articles by Tim

  • IGM Credit, IGM FX and Rates

    China Insight: Bond supply remains a concern in Q4

    China Insight 1001

    Supply remains a concern in Q4 (chart 1). With reference to the central government's financing plan for the year, we expect supply of CGBs to remain huge in the rest of the year. Year-to-date the net CGB financing proceeds reached CNY2473bn, with the remaining CNY1307bn for Q4, which accounts for as much as 35% of the full-year net financing target...

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Implications of CGB Inclusion in The WGBI

    China Insight

    As widely expected, FTSE Russell on 24 Sep in the New York afternoon announced that China Government Bonds (CGBs) will be included into the World Government Bond Index (WGBI), effective Oct 2021. Major investment banks estimate that CGBs would receive a weighting of around 5.7% in the WGBI. Assuming AUMs benchmarked to WGBI index is around USD2.5tn, the inclusion would result in USD142bn inflows to the CGB market. Assuming the phasing-in will last for 20 months, same as the time frame set for Bloomberg Barclay's Global Aggregate Index inclusion, CGBs will receive USD7bn inflows per month as a result of WGBIs month-end rebalancing. Once included, China will become the second highest-yielding country in the WGBI (chart 1), which should be very appealing to yield-seekers.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Liquidity Remains Tight, Despite Sizeable MLF

    China Insight

    PBOC on 15 September conducted a CNY600bn 1-year medium-term lending facility (MLF), more than enough to roll over the same type of facility (sized at CNY200bn) that expired in the same week. Despite the rate being unchanged at 2.95%, the facility size was large enough to stir up speculation over a possible re-emergence of a looser liquidity environment before and after the upcoming Golden Week holiday. However, what actually happened over the rest of the week suggested the surprisingly large MLF operation was mainly aimed at supporting market sentiment before the CGB auction held on 16 September. As soon as the auction was wrapped up, PBOC immediately showed its reluctance to let liquidity go any looser again. On 17 Sep, PBOC only conducted a small-sized 7-day OMO reverse repo, resulting in a re-emergence of net liquidity withdrawal.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Bond yields see upside risk as deleveraging in play

    China Insight

    Interbank liquidity tightening during August coincided significantly with the policymakers' introduction of a set of new regulatory measures targeted for property developers. PBOC and the Ministry of Housing and Urban-Rural Development (MOHURD) in mid-Aug had a meeting with major property developers in Beijing on the new rules set to monitor property developers' funding and financing outlook. The new rules include: (1) debt-to-asset ratio must not exceed 70% after contract liabilities; (2) net gearing must not exceed 100%; and (3) Cash-to-short-term debt ratio has to be not less than 1. Developers who fail to meet these requirements are required to submit an action plan by the end of Sep on how to reduce their debt levels within a year and meet all the above three requirements within 3 years. A significant fall in structured deposits and ordinary deposits since the beginning of the year (chart 1) suggests a lot of money has been poured into the real estate market again. That's reflected in the rapid rise in real estate FAI year-to-date (chart 2). Against this backdrop, policymakers have found it necessary to curb the pace of property developers' re-leveraging before it's too late.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: USD/CNH Set to Bounce as Biden’s Lead Narrows

    China Insight

    USD/CNH reached as low as the 6.81 level at the beginning of this month. Recall, we said in the previous issue of this publication: "USD/CNH will be at 6.80 when 50% of a rollback of List 3 tariffs is fully priced and at 6.65 when 100% of a rollback is priced". Based on this assumption, we believe USD/CNH for now has already largely priced in a victory of Biden, who did say in early-August that he would remove the tariffs on China if he won the election in November. While FX players were still confident that Biden would defeat Trump in the election, we noted a few days ago Biden's clear lead over Trump as suggested by the betting odds (chart 1) no longer exists. As such, we won't be surprised if Biden fails to maintain his lead over Trump in some of the major polls before the first presidential debate takes place on 29 September. Because the market is very sensible, there is a good chance USD/CNH is already starting to price out some optimism over Biden's odds. Therefore, the risk of a bounce for USD/CNH from here should not be underestimated. In our view, 6.88-6.90 is reachable in the near term.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: USD/CNH is Pricing Biden’s Removal of Tariffs

    China Insight

    Joe Biden said in an interview on 5 August that he would remove Donald Trump's tariffs on imports from China if he won the presidential election in November. Biden's remark was taken very seriously by the markets as he has been holding a clear lead over Trump in polls since the beginning of Q2. With specific regard to USD/CNH FX, a clean breach of July's month-low 6.9645 came immediately after Joe Biden said he would remove the tariffs on China. Since then, the pair has been pricing a potential rollback of the existing US tariffs on Chinese imports.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Liquidity Keeps Tightening on Heavy Bond Supply

    China Insight

    PBOC conducted a CNY700bn 1-year Medium-Term Lending Facility (MLF) on 17th August, which more than offset CNY550bn which matured on 15th. Despite that, combined with the subsequent liquidity injections via OMO reverse repo, we did not see any easing in interbank liquidity. Instead, funding pressure kept picking up, resulting in a rise in the 7-day interbank repo to nearly 2.30%.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: CGB Yields See Upside Risk on Lacklustre Demand

    China Insight

    As per the official data, national commercial banks in mainland China increased their holdings of CGBs by CNY395bn in July, accounting for a significant portion of fresh supply in the month (chart 1). Meanwhile, city commercial banks and offshore investors increased their CGB holdings by CNY40bn and CNY46bn, respectively.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: What Signals Did Q2 Monetary Policy Report Give?

    China Insight

    The PBOC released its Q2 monetary policy report (MPR) on Thursday. The report sounds a bit hawkish, quite consistent with recent policy communications such as the recent Politburo meeting statement. As per the report, PBOC would make its prudent monetary policy more flexible and targeted, and keep liquidity appropriately ample to support economic recovery. It is particularly worth noting that PBOC in the report said excessively low interest rates will lead to misallocation of resources. That's the first time PBOC has talked about the possible negative(s) of low interest rate policy since the counter-pandemic stimulus introduced in Q1. Signals now become much clearer: PBOC has no intention to make further broad-based reductions in interest rates or the RRR. In regard to interest rates, PBOC specifically said it would "guide market interest rates to smoothly operate around OMO (open market operations) and MLF (Medium-term lending facility) rates". That means PBOC would prevent repo rates from deviating significantly from the OMO rates. As such, there is a good chance the interbank 7-day repo rate will keep seesawing in a 2.10-2.30% range during most of Q3 if PBOC keeps the 7-day OMO rate unchanged at 2.20%.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Politburo Re-affirmed Bias in Favour of Less Dovish Policy

    China Insight

    Xinhua News Agency reported the Politburo held a meeting on the economy on 30 July (Thursday). The CCP also held a meeting with non-CCP political parties and non-political representatives. President Xi chaired both meetings. Compared to the meeting held on 17 April, we note some changes in wording were made to the remarks on monetary and fiscal policies in the 30 July meeting. 30 July meeting (as per Xinhua News Agency): - "While requiring full implementation of macro policies, the meeting called for pursuing a more proactive and effective fiscal policy that delivers solid outcomes, and a more flexible and appropriate monetary policy that targets sound results, according to the meeting". 17 April Meeting (as per Xinhua News Agency): - "Monetary policies should be more flexible and balanced and instruments such as reserve requirement ratio cuts, interest rate reductions and reloans should be fully leveraged to ensure reasonable and sufficient liquidity and a lower interest rate in the loan market, the meeting said, stressing the need to channel capital into the real economy, especially medium-sized, small and micro enterprises".

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Xi Has Strong Preference For Monetary Policy Normalisation

    China Insight

    In a key speech delivered at a symposium with corporate leaders in Beijing on Tuesday (21 July). President Xi (as per China Daily) urged better implementation of aid packages for businesses, with steps to enforce a more proactive fiscal policy and more prudent and flexible monetary policy to ensure macro policies are more targeted and effective, adding that China will continue with measures to cut taxes, fees, rents and interest rates and ensure its various aid measures can be channeled directly to the grassroots and benefit market players. Before that, President Xi at a meeting on 22 Feb (5 months ago) pledged to exercise more flexibility in monetary easing. The word "prudent" re-appeared in Xi's speech on Tuesday, echoing PBOC's bias in favour of a normalisation of the monetary policy.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Strong Q2 GDP growth signals no more monetary easing

    China Insight

    China's GDP growth jumped to +3.2% y/y in Q2, from -6.8% y/y in Q1. The print was well above market expectations. Before the data was released, PBOC held a press conference on 10 July. At the conference, PBOC officials defined appropriate monetary policy as: 1. quantity of credit supply should not be too large; 2. interest rate should not be too low.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: A look back at 2015 for clues on A-shares' next move

    China Insight

    After trading lackluster in a 500-point range for 12 months, the Shanghai Composite Index (SHCOMP) finally made an upside breakthrough at the beginning of this month on the back of high trading volumes. Suddenly, the market was flooded with optimism. Interbank repo rates have been creeping upwards over the past few days on the back of surging demand for borrowing (financing) associated with IPO subscriptions. Meanwhile, bond yields have been heading upwards as investors switch out of bonds into equities. The whole picture reminds us of the equity boom during November 2014 to June 2015 and the bust afterwards.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: IRS Curve Steepener is Favoured After Latest Rate Cut

    China Insight

    PBOC announced on the night of 30 June that it will cut the re-lending and re-discount rates by 25bp, effective from 1 July, aimed at reducing funding costs for smaller firms and rural sectors. This narrow-based monetary easing echoed CBRC chairman Guo Shuqing's and PBOC governor Yi Gang's views in favour of a timely withdrawal of the counter-pandemic stimulus. In fact, our observation is PBOC has been very cautious about pumping liquidity into the system via OMO since May.

    Topic Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Implications of a Sustained Rise in Repo Rates

    China Insight

    China onshore interbank CNY repo rates (chart 1 and 2) have been creeping upward since CBRC chairman Guo Shuqing at the beginning of the month openly stressed the importance of financial risk control.

    Topic Industry News