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Affinity Policy Comment 03 MARch 2019

 

Two sessions obsession
Asian markets rally as China’s largest legislative event of the year gets underway.


China’s congress opens in preparation for the country’s annual legislative sessions, or more commonly known ‘two sessions’. Each spring in China, Beijing hosts the annual meetings for the near- 3,000 strong National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC), the country’s key legislative and advisory bodies that both review and inform the country’s policy objectives. The two sessions are considered paramount, as the outcome essentially informs China’s political-economic landscape for the year to come. Some two sessions outcomes are more long-standing, however. Last year, for example, the state-party controlled NPC removed President Xi Jinping and Vice President Wang Qishan’s term limits, while granting the Communist Party more political liberties and control.

Beijing is placed under high security as the sessions commence, and although the spectacle draws in global attention every spring, this year’s sittings will be more poignant than ever. China’s growth miracle story over the past four decades is beginning to finally catch up with the country, with their model causing chronic symptoms of wealth gaps, financial inefficiencies in the private sector and industrial overcapacity. These factors have led the country to suffer one of its lowest growth rates in years, and markets are hoping that this year’s summits will offer the economy some direction.

Asian stock markets rallied in expectation of resolutions for some of today’s thorniest economic issues, such as trade wars, China’s slowing economic growth and soaring local debt. Although partly stimulated by Trump and Xi’s progress in trade negotiations, a recent surge in onshore Chinese equities has been largely pushed around confidence in the upcoming sessions in Beijing.








Tomorrow, Chinese premier Li Keqiang is to announce China’s GDP target, which many expect to be around the 6-6.5% ballpark. Although such a figure is an unstimulating acceptance of the slowdown, it also indicates the country is ready to tackle the challenge straight on. Morgan Stanley anticipates Beijing is to continue its economic easing policies to stimulate the necessary growth. With a majority of the sessions’ legislation being set out and finalised beforehand, there’s been talk of a new foreign investment law being approved, as means of easing anxieties around US intellectual property theft allegations. According to recently circulated draft versions, the law is to bar local governments from requiring non-Chinese companies to hand over technology to Chinese firms.

In addition, key policymakers have pledged more tax cuts and infrastructure funding, alongside injecting some major liquidity into the country’s financial system in response to weaker growth. According to ING’s Iris Pang, deleveraging is unlikely to be one of China’s solutions this year, due to the pressure it places on growth. “We will be focusing on whether the government is prepared to invest in infrastructure to support the economy. From this, we will be able to gauge the severity of the headwind from the ongoing trade dispute.”

Other hot topics include drug regulation, veterans’ affairs and protection of the Yangtze River, a key waterway to China’s international trade and the shipping industry. Xi will also have to face hot topics such as the Huawei scandal and government policies targeting the ethnic minority Uighurs in Xinjiang.

The two weeks that the sessions take up will have markets on high alert, as they anxiously await signs of progress from Beijing. Although the task of controlling debt yet spurring growth is a challenging one, the expectation is that the sessions will deliver on solutions that will give markets some long-needed confidence.



Affinity Research LLP

what we do

  • Dry Cargo

    Dry Cargo

    Our dry bulk chartering teams in Sydney, Melbourne, Perth, Santiago, Lima, Montevideo, Singapore and London are cargo-focussed and they fix voyage, COA and time charter business on behalf of their clients with a wide range of ship owners.

    Contact: David Oakley
    [email protected]
    +61 2 9937 8806

    Finance

    Finance

    Affinity Financial Products Ltd is authorised by the FCA to provide advice and execution of regulated activities. We focus our efforts on asset-related transactions often structured as corporate share sales or mergers and acquisitions.
    We work in partnership with investment banks providing specific, shipping-related advice.

    Contact: Andrew Finn
    [email protected]
    +44(0)20 3142 0114

    LNG

    LNG

    Our young and dynamic LNG team possess wide-ranging experience of spot and term charters working with all major LNG shipowners and charterers. The LNG team has close interaction with the Newbuilding and Sale & Purchase divisions with an unrivalled track record of contracting LNG newbuildings and in the sale and purchase of LNG assets.
    We maintain up-to-date knowledge and an understanding of new technologies within the LNG sector to ensure that our clients can make the most suitable and cost-effective decisions on shipping solutions.

    Contact: Joni Mackay
    [email protected]
    +44(0)20 3142 0133

    Newbuilding

    Newbuilding

    Our Newbuilding team has concluded over 500 newbuildings of all types, including LNGCs, FSRUs, drillships, crude tankers, product tankers and dry cargo vessels. We have contracted in all major newbuilding centres globally, with particular focus on the Korean Shipyards.

    Contact: Nick Wood
    [email protected]
    +44(0)20 3142 0111

    Offshore

    Offshore

    Affinity Offshore is based out of our Oslo and Houston offices. The Team focuses on world-wide sale & purchase of offshore support vessels, as well as chartering – particularly in the Americas and Mediterranean/MENA regions.

    Contact: Tor-Øyvind Bjørkli
    [email protected]
    +47 2109 8211

    Research

    Research

    Our research department combines real time market information with econometric modelling and the latest technology. 

    Contact: Neal Smerdon
    [email protected]
    +44(0)20 3142 0187

    S & P

    S & P

    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Toby English
    [email protected]
    +44(0)20 3142 0123

    Tankers

    Tankers

    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
    [email protected]
    +44(0)20 3142 0142

    Valuations

    Valuations

    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Contact: Ben Pusey
    [email protected]
    +44(0)20 3142 0125

    Dry Cargo

    Our dry bulk chartering teams in Sydney, Melbourne, Perth, Santiago, Lima, Montevideo, Singapore and London are cargo-focussed and they fix voyage, COA and time charter business on behalf of their clients with a wide range of ship owners.

    Contact: David Oakley
    [email protected]
    +61 2 9937 8806

    Finance

    Affinity Financial Products Ltd is authorised by the FCA to provide advice and execution of regulated activities. We focus our efforts on asset-related transactions often structured as corporate share sales or mergers and acquisitions.
    We work in partnership with investment banks providing specific, shipping-related advice.

    Contact: Andrew Finn
    [email protected]
    +44(0)20 3142 0114

    LNG

    Our young and dynamic LNG team possess wide-ranging experience of spot and term charters working with all major LNG shipowners and charterers. The LNG team has close interaction with the Newbuilding and Sale & Purchase divisions with an unrivalled track record of contracting LNG newbuildings and in the sale and purchase of LNG assets.
    We maintain up-to-date knowledge and an understanding of new technologies within the LNG sector to ensure that our clients can make the most suitable and cost-effective decisions on shipping solutions.

    Contact: Joni Mackay
    [email protected]
    +44(0)20 3142 0133

    Newbuilding

    Our Newbuilding team has concluded over 500 newbuildings of all types, including LNGCs, FSRUs, drillships, crude tankers, product tankers and dry cargo vessels. We have contracted in all major newbuilding centres globally, with particular focus on the Korean Shipyards.

    Contact: Nick Wood
    [email protected]
    +44(0)20 3142 0111

    Offshore

    Affinity Offshore is based out of our Oslo and Houston offices. The Team focuses on world-wide sale & purchase of offshore support vessels, as well as chartering – particularly in the Americas and Mediterranean/MENA regions.

    Contact: Tor-Øyvind Bjørkli
    [email protected]
    +47 2109 8211

    Research

    Our research department combines real time market information with econometric modelling and the latest technology. 

    Contact: Neal Smerdon
    [email protected]
    +44(0)20 3142 0187

    S & P

    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Toby English
    [email protected]
    +44(0)20 3142 0123

    Tankers

    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
    [email protected]
    +44(0)20 3142 0142

    Valuations

    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Contact: Ben Pusey
    [email protected]
    +44(0)20 3142 0125

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    1st Floor "De Los Patricios" Building,
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    0256 Oslo
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