Deleveraging who? Not China for sure

While it is understandable, due to record low interest rate in developed market world, emerging market companies levered up to the neck to benefit from falling developed market currencies and lowered interest rates, backed by hunt for yield by investors. However, what is not understandable is even after 2013, taper tantrum, why emerging economies haven't delivered themselves enough heading into 2016, especially China.

While some of the economies like India have started to de-lever, China leveraging about same pace at five years ago and it is not sustainable. Like many other blogs and analysts we have also been arguing that real problem of China isn't in the financial market nor in its currency but debt mountain, which is close to 250 of GDP.

Today, loan statistics of China for December was released. While some might point out, official new Yuan loan came at 598 billion Yuan, much lower than expected 700 billion, aggregate financing which is much broader measure of credit growth jumped up 78% from November to 1.82 trillion Yuan or $276 billion in December.

With pace of credit growth surpassing GDP growth, China is inevitably heading towards a collision with this massive debt mountain at some point in time in future.