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Fearing Government Scrutiny, HSBC Waves Goodbye To China PMI Sponsorship
After five years, HSBC is officially calling it quits on its sponsorship of Markit’s EM PMIs, meaning the bank’s name will no longer be stamped on the one data point out of China that supposedly retains some degree of objectivity.
Although HSBC claims it’s simply time to move on after a “successful” partnership, those ‘in the know’ (so to speak) say political concerns were almost certainly behind the decision. Put simply: with Beijing struggling to convince the world that despite slumping export growth and weak readings on key data points such as rail freight volumes, the Chinese economy is still expanding at a 7% clip, sponsoring an index that consistently comes in weaker than the official numbers is a politically dangerous move to make. Here’s Reuters:
HSBC has ended its marketing tie-up with financial information firm Markit Ltd, both companies told Reuters on Friday, winding down a five-year relationship that some industry insiders said may have become too expensive and a potential political liability for HSBC in China.
Markit and HSBC spokespersons said that HSBC had ended its sponsorship of the closely watched China Purchasing Managers Index and of other emerging markets indexes compiled by Markit.
"The sponsorship arrangement is now coming to an end and we will announce replacement sponsors soon," said Laura Davis, a Singapore-based spokeswoman for Markit in an email statement.
Market insiders have been chattering about the coming end of the partnership for months, with some speculating that HSBC was ending its sponsorship of the indicator because of pressure from Beijing, or because the sponsorship costs had become too expensive, or both.
And more color from the Australian Financial Review:
For those on wanting to understand China there is one economic statistic more closely watched than any other.
It's the Flash Purchasing Managers Index - or PMI - which is released in the last week of every month.
For the last five years the index has been sponsored by HSBC, giving the bank an easy stream of publicity and allowing it to brand itself as an authority on the Chinese economy.
But HSBC's sponsorship will finish at the end of this month after the bank did not renew its global agreement with the survey's private sector compiler, Markit. The bank will end its sponsorship of all 23 emerging market PMI's produced by Markit.
This would suggest other big foreign banks operating in China will jump at the chance to sponsor the survey and have their name splashed all over the media each month.
Not so, according to one person who was approached to take on the sponsorship.
While attracted by the branding opportunity his organisation declined as it was "too risky" in the current climate.
"If you are a sizeable bank that wants to do more business in China you don't want to make parts of the Chinese government angry," says the person who asked not to be named. "Sponsoring the survey is likely to affect your future business expansion in China."
The issue is that the HSBC/Markit PMI has been consistently weaker or more negative over the last year than the official PMI released by China's National Bureau of Statistics. In a country where the official narrative on everything from the economy to the weather is tightly controlled, this is a problem as it reinforces the view that China's official data can't be trusted.
Putting your name to such a high profile survey therefore makes you a target for China's regulators, according to the source.
In other words, with the Chinese economy facing the formidable task of transitioning to a consumption and services-led model, banks who intend to benefit from the liberalization of China's financial markets aren't keen on making enemies within the Politburo by endorsing a data point that is likely to diverge markedly from the official line going forward — especially given the likelihood that economic growth will continue to decelerate.
It will be interesting to see who takes HSBC's place. We'll leave you with the following hint from Markit itself:
"It's a blue chip name …. but no its' not a bank."
Oh, the intrigue!
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Well at least HSBC has their money laundering for the drug cartels to help soften the blow (pun intended).
Rather, being forced to return AU to Texas, hsbc dont want make angry chinese Tungsten supplier.
Translation: "We see that the Chinese don't fuck around when they deal with people with us, so we just left."
Ali Baba
Things are tightening up for HSBC since the light was shining on them for laundering money for drug cartels and the friends of the CIA.Too much attention now and no extra money to throw around.
How do you say Kanjorski in Cantonese?
Don't they have a Supreme Corp. to redefine economic terms and statistics for the Party/Syndicate in China?
S&PissPoors or Joody's will stamp any piece of steaming shit AAA for a few counterfeit fiat ledger nits.
The NWO
considering HSBC is a cabal bank what do you expect. Yea, China's GDP growth is wonky to say the least.
Well, they atleast have the New Silk Road to boost GDP going down the road, as well as the Eurasia trade zone integration projects etc. More than I can say about the US's stupid TPP/TTIP and EU's sanctions to infinity.
True . Today China, India fast-track BCIM economic corridor project .
How's that big lawsuit going, ... against Markit?
Gallup vs Univ of Michigan confidence survey has same sponsorship question
The corruption of metrics everywhere coupled with Loans not marked to market on zombie banks books with zombie borrowers is the way Neo-capitalism will thrive