1/2/16: BRIC Manufacturing PMI January: A Test of Stagnation?

I covered China Manufacturing PMI in an earlier separate note here: http://trueeconomics.blogspot.com/2016/02/31116-china-manufacturing-pmi-its-at.html with core conclusion that Chinese Manufacturing PMIs have been now running second worst in the BRIC’s group since July 2015, staying above only Brazil’s - a country that is in an outright recession. PMI index came in tat 48.4 in January, marginally up on 48.2 in December 2015, marking 11th consecutive month of sub-50 readings. 3mo average through January 2016 is now at 48.4 against 3mo average through October 2015 at 47.6. Current 3mo average is down significantly on 49.8 3mo average through January 2015. Last time Chinese Manufacturing posted statistically significant expansion (as measured by PMI reading above 51.46 - the statistically significant growth marker - was back in July 2014.

India Manufacturing PMI posted a rise to 51.1 in January from 49.1 in December, with January reading being highest in 4 months. This sounds like good news, expect it is not. The reason is that at 51.1, the PMI is well below historical average of 54.5. And it is below January 2015 level of 52.9. 3mo average through January 2016 is at zero growth mark 50.0, which compered poorly to 3mo average through October 2015 at 51.4 and worse relative to 53.6 which is 3mo average through January 2015. Market release was quite upbeat on India numbers, however, noting that “the industry recovered following the contraction seen at the end of last year. Alongside a resumption of output at some firms impacted by December’s flooding, manufacturers also benefited from rising inflows of new business from domestic and export clients.” The sectoral breakdown of the index is also concerning. Again per Markit, “The consumer goods subsector remained the principal growth engine at the start of the year, seeing substantial expansions of both output and new orders. In contrast, producers of investment goods saw output and new orders fall, while production volumes stagnated in the intermediate goods category.”

Russian PMIs were covered in a stand alone post here: http://trueeconomics.blogspot.com/2016/02/1216-russian-manufacturing-pmi-january.html with core conclusion that although Russia retained its's position as the second strongest performing economy by Manufacturing PMIs in the BRIC group in January, the latest reading puts Russian Manufacturing in a stagnation zone too close to 50.0 to call it a full-blown contraction. This has meant that over the last 3 months, Russian Manufacturing PMI averaged 49.7, a reading nominally below 50.0, although an improvement on 49.1 average for 3 months through October 2015, and on 49.4 3-mo average through January 2015. In simple terms, Russian Manufacturing continued to contract in 3 months through January 2016, but the rate of contraction was virtually indistinguishable from zero growth.


This leaves us to cover Brazil Manufacturing PMI. Brazil Manufacturing index posted a rise in January, hitting an 11-mo high of 47.4. By all normal metrics, this is a disaster territory reading, consistent with rather sharp deterioration in trading conditions. But for Brazil - this was an improvement, especially as output and news orders both were contracting at slower rates in January. Per Markit: “The downturn in the Brazilian manufacturing sector continued at the start of 2016, with levels of production and new orders contracting for the twelfth successive month. This continued to filter through to decisions relating to staff hiring, stock holdings and purchasing activity, all of which also declined during the latest survey month.”  On the positive (sort of) side, “output declined at weaker rates in each of the three production categories (consumer, intermediate and investment) covered by the survey. Underlying the latest decrease in output was a further reduction in the level of incoming new orders. The latest drop in inflows of new work received was mainly centred on the domestic market, as the volume of new export business expanded for the second straight month in January.” On a 3mo average basis, 3mo average through January 2016 is at 44.5, which is worse that 3mo average through October 2015 (45.6) and 3mo average through Ja
nuary 2015 (49.9). In simple terms, Brazil remains the basket case of BRIC economies, leading the group to the downside on Manufacturing.

Chart and table below summarise the BRIC’s outlook:

So, overall, BRIC Manufacturing side of the economy is still in a woeful shape. India's return to growth is relatively weak, while contractionary conditions prevail in Brazil (strong, albeit moderating on the end of 2015), Russia (very weak contraction, closer to stagnation) and China (where PMI data has been at serious odds with official national accounts data for some time now). The net result for the global growth is not exactly encouraging.

1/2/16: Russian Manufacturing PMI January 2016: Stagnation Looms

Russian Manufacturing PMI rebound in January compared to December slump, rising from 48.7 in December (the lowest reading since August 2015, to 49.8. Still, January reading was nominally below 50.0, signalling second consecutive month of contraction in country manufacturing activity. In statistical significance terms, January reading is basically singling zero growth.

Per Markit, this means that “Russian manufacturing sector edgeed closer to stability during the first month of 2016” with “both output and incoming new orders return to growth territory”. However, overall, “survey data for the first month of 2016 remained disappointing for Russian manufacturers, as the sector stayed in contractionary territory. Although there were marginal increases in volumes of both production and incoming new orders, job shedding was still evident. Meanwhile, average cost burdens increased at a marked pace, while a more moderate rise in output charges was reported”.

On sectoral basis,”production volumes grew at Russian goods producers during January, having contracted in the final month of 2015. Anecdotal evidence suggested the expansion in output was linked to an increase in
incoming new orders. Job cuts were still evident in the manufacturing sector of Russia in January, continuing a trend that began in July 2013. The rate of job shedding accelerated to a four-month high and was solid overall.”

All of the expansion in new orders was contained within domestic economy, “as new export orders contracted. Falling new business from abroad has been reported in every month since September 2013.”

On a 3mo average basis, Manufacturing PMI for 3 months through January 2016 was 49.7 - below 50.0, although an improvement on 49.1 average for 3 months through October 2015, and on 49.4 3-mo average through January 2015. In simple terms, Russian Manufacturing continued to contract in 3 months through January 2016, but the rate of contraction was virtually indistinguishable from zero growth.

As shown above, Russia retained its's position as the second strongest performing economy by Manufacturing PMIs in the BRIC group.

31/1/16: China Manufacturing PMI: It's at Recession Levels, Folks

China manufacturing PMI signalled another month of deterioration in operating conditions for January 2016. Per Markit, “with both output and employment declining at slightly faster rates than in December. Total new business meanwhile fell at the weakest rate in seven months, and despite a faster decline in new export work.’

Overall, PMI index came in tat 48.4 in January, marginally up on 48.2 in December 2015, marking 11th consecutive month of sub-50 readings. 3mo average through January 2016 is now at 48.4 against 3mo average through October 2015 at 47.6. Current 3mo average is down significantly on 49.8 3mo average through January 2015. Last time Chinese Manufacturing posted statistically significant expansion (as measured by PMI reading above 51.46 - the statistically significant growth marker - was back in July 2014.

Interestingly, Markit is using very ‘diplomatic’ language in their release, saying that “Production at Chinese goods producers fell for the second successive month in January. Though modest, the rate of contraction was the fastest seen in four months. According to panellists, relatively weak market conditions and fewer new orders had led firms to cut production.” In simple terms, this means that the Manufacturing sector in Chine is not growing slower, but is contracting. Which, of course, is vastly inconsistent with official GDP growth data. Over the last 15 months, Chinese Manufacturing managed to hit PMI >50.0 on only one month. One month. How this can be consistent with an economy growing at 6.9 percent is anyone’s guess.

And Chinese companies are now appearing to be deep in revenue recession too. per Markit: “Weaker client demand led manufacturers to discount their prices charged again in January, thereby extending the current sequence of deflation to 18 months (although the rate of reduction was the slowest seen since June 2015). Lower selling prices were supported by a further fall in average input costs at the start of the year.”

In fact, Chinese Manufacturing PMIs have been now running second worst in the BRIC’s group since July 2015, staying above only Brazil’s - a country that is in an outright recession.

I mean you getting any signs of the 6.8-6.9 percent growth anywhere here? No? Well, in general, Services PMIs are also in a tanking mode, but more on this separately.

31/1/16: Why is Inflation so Low? Debt + Demand + Oil = Central Bankers

One of the prevalent themes in macroeconomic circles in recent months has been what I call the “Hero Central Banker” syndrome. The story goes: faced with the unprecedented challenges of dis-inflation, Heroic Central Bankers did everything possible to induce prices recovery by deploying printing presses in innovative and outright inventive ways, but only to see their efforts undermined by the falling oil prices.

Of course, the meme is pure bull.

Firstly, there is no disinflation. There is a risk of deflation. Let’s stop pretending that negative growth rates in prices can be made somewhat more benign if we just contextualise them into a narrative of surrounding ‘recovery’. Dis-inflation is deflation anchored to an invented period duration of which no one knows, but everyone assumes to be short. And there is no hard definition of what 'short' really means either.

Secondly, there is no mystery surrounding the question of why on earth would we have ‘dis-inflation’ in the first place. Coming out of the Global Financial Crisis, the world remains awash with legacy debt (households) and new debt (corporates and governments). This simply means that no one, save for larger corporations and highly-rated governments, can borrow much in the post-GFC world. And this means that no one has much of money to spend on ‘demanding’ stuff. This means that markets are stagnating or shrinking on demand side. Now, the number of companies competing for stagnant or shrinking market is not falling. Which means these companies are getting more desperate to maintain or increase their market shares. Of these companies, those that can borrow, do borrow to fund their expansions (less via capex and more via M&As) and to support their share prices (primarily via buy-backs and further via M&As); and the same companies also cut prices to keep their effectively insolvent or debt-loaded customers. slow growing supply chases even slower growing (if not contracting) demand… and we have ‘dis-inflation’.

Note: much of this dynamic is driven by the QE that makes debt cheaper for those who can get it, but more on this later.

Thirdly, we have oil. Oil is an expensive (or used to be expensive) input into producing more stuff (more stuff that is not needed, by the companies that can’t quite afford to organically increase production for the lack of demand, as explained in the second point above). So demand for oil is going down. Production of oil is going up because we have years of investments by oil men (and few oil women) that has been sunk into getting the stuff out of the ground. We have falling oil prices. Aka, more ‘dis-inflation’.

Note: much of this dynamic is also driven by the QE which does nothing to help deleverage households and companies (supporting future demand growth) and everything to support financial sector where inflation has been all the rage until recently, and in Government bonds continues to-date.

Fourth, when Heroic Central Bankers drop policy rates and/or inject ‘free’ cash into the economy. Their actions fuel  borrowing in the areas / sectors where there either exists sufficient collateral or security of cash flows to borrow against or there is low enough debt level to sustain such new borrowing. You’ve guessed it:

• Financials (deleveraged using taxpayers funds and sweat with the help of the "Heroic Central Bankers" and protected from competition by the very same "Heroic Central Bankers") and 
• Commodities producers (who borrowed like there is no tomorrow until oil price literally fell off the cliff). 

When the former borrowed, they rolled borrowed funds into public debt and into financial markets. There was plenty inflation in these 'sectors' though they didn't quite count in the consumer price indices. For a good reason: they have little to do with consumers and lots to do with fat cats. However, part of the inflows of funds to the former went to fund ‘alternative’ energy projects - aka subsidies junkies - which further depresses demand for oil (albeit weakly). Both inflows went to support production of more oil or distribution of more oil (pipelines, refineries, export facilities etc) or both.

Meanwhile, inflows from the financial institutions to the markets usually went to larger corporates. Guess where were the big oil producers? Right: amongst the larger corporates. Thus, cheap money = cheaper oil, as long as cheap money does not dramatically drive up inflation. Which it can’t because to do so, there has to be demand growth at the household level, the very level where there is no cheap money coming and the debts remain high.

Now, take the four points above and put them together. What they collectively say is that the risk of deflation in the euro area (and anywhere else) is not down to oil price collapse, but rather it is down to demand collapse driven by debt overhang in the real economy (corporates and households and governments). And it is also down to monetary policy that fuels misallocation of credit (or risk mispricing). Only after that, risk of deflation can be assigned to oil price shock (in so far as that shock can be treated as something originating from the global economy, as opposed to from within the euro area economy). And across all these drivers for deflation risks up, there are fingerprints of many actors, but just one actor pops up everywhere: the "Heroic Central Banker".

A recent paper from the Banca d’Italia actually manages to almost grasp this, albeit, written by Central Bankers, it just comes short of the finish line.

Antonio Maria Conti, Stefano Neri and Andrea Nobili published their “Why is Inflation so Low in the Euro Area?” in July 2015 (Bank of Italy Temi di Discussione (Working Paper) No. 1019: http://ssrn.com/abstract=2687105). They focus on euro area alone, so their conclusions do treat oil price change as an exogenous shock. Still, here are their conclusions:

• “Inflation in the euro area has been falling steadily since early 2013 and at the end of 2014 turned negative. 
• "Part of the decline has been due to oil prices, but the weakness of aggregate demand has also played a significant role. …
• "The analysis suggests that in the last two years inflation has been driven down by all three factors, as the effective lower bound to policy rates has prevented the European Central Bank from reducing the short-term rates to support economic activity and align inflation with the definition of price stability. Remarkably, the joint contribution of monetary and demand shocks is at least as important as that of oil price developments to the deviation of inflation from its baseline.” 

Do note that the authors miss the QE channel leading to deflation and instead seem to think that the only thing standing between the ECB and the return to normalcy is the need to cut rates to purely negative nominal levels. In simple terms, this means the authors think that unless ECB starts giving money away to everyone, including the households (a scenario if nominal rates turn sufficiently negative) without attaching a debt lien to these loans, there is no hope. In a sense, I agree - to get things rolling, we need to cancel out household debts. This can be done (expensively) by printing cash and giving it to households (negative nominal rates). Or it can be done more cheaply by simply writing down debts, while monetising write-offs to the risk-weighted value (a fraction of the nominal debt).

I called for both measures for some years now.

Even "Heroic Central Bankers" (for now within the research departments) now smell the rotten core of the QE body: without restoring balancesheets of the households and companies, there isn't much hope for the risk of dis-inflation abating.

30/1/16: Russian Trade Balance in Goods: 2015

On foot of my note covering Russian preliminary estimates for external trade, some readers asked if the figures provided (see here: http://trueeconomics.blogspot.com/2016/01/23116-russian-external-balance-2015.html) were indeed in Rubles. The answer is no - these are US Dollar amounts at the exchange rate posted time of data release (so preliminary figures are subject to change due to exchange rates effects as well as data updates).

As with all national statistics everywhere, Russian data has better coverage of goods trade, than services trade. Services trade generally lags goods trade in terms of reporting for a range of reasons that are reflected in all countries accounts. While we have only estimates for services trade through November 2015, we have actual figures for goods trade through the same period. These are reported by the Central Bank of Russia and provided below.

For 11 months (January-November) of each year, Russian exports of goods (only) fell from USD459.381 billion in 2014 to USD311.934 billion in 2015 - a decline of 32.1% y/y and a drop of 34.9% on comparable figure in 2012. Meanwhile, imports of goods (only) fell from USD283.541 billion in 2014 to USD176.652 billion in 2015 -a decline of 37.7% y/y and a drop of 41.9% on 2012 levels.

As the result, Trade Balance (goods only) for 11 months of 2015 fell from USD175.84 billion to USD135.582 billion - down 23.1% y/y. The Trade Balance (for 11 months cumulative) was down 22.8% on 2012 levels.

We can, with some stretch of imagination, extrapolate 11 months figures to full year. To do this, we adjust the figures for seasonality (December imputed weighting in trade volumes across both exports and imports).

If we do so, full year exports of goods for Russia come in at around USD342.9 billion down 31.1% y/y, while imports come in at USD194.32 billion, down 36.9% y/y. Trade balance for the full year 2015 (goods only) comes in at around USD147.6 billion, down 22.2% y/y, making 2015 the lowest trade surplus year (goods only) since 2010 when trade balance stood at just under USD147.0 billion.

Charts to illustrate the dynamics based on imputed full year values (note: horizontal lines are period averages):

For what it is worth, it might be interesting to make a comparative between 2015 levels of external trade and pre-2000 era. Average exports of goods in 1994-1999 were USD79.4 billion and 2015 levels were 4.3 times higher. Average imports of goods in 1994-1999 were USD58.45 billion and these rose 3.3 times in 2015 figures. As the result, average 1994-1999 trade balance was USD20.95 billion. 2015 trade balance was 7 times larger than that.

Not too shabby numbers, event though 2015 was a tough year of trade for Russian exporters.

29/1/16: Murray Index of Top 20 Journalists on Twitter

I don't usually post this sort of things around here, but given my fond memories of working as the editor of Business & Finance and my deep respect for the profession of journalists, I am delighted to have made some sort of rankings in the field:

Respectable 14 for such an august company!

29/1/16: And the IBRC Interest Overcharging Ship Sails On...

Just after posting the Mick Wallace video link on Nama,  a knock on my blog door left this nice little letter at the doorstep.

Now, I obviously removed the names of people involved and other identifying information. Which leaves us with the substance of the said letter: IBRC are conducting an internal review into interest overcharging...

Why that's nice.

Let's recall, however, the following facts:

1. Anglo overcharging was notified to the authorities officially at least as far back as 2013 (see link here: http://trueeconomics.blogspot.ie/2015/06/12615-anglo-overcharging-saga-ganley.html)
2. It was known since at least 2010 in the public domain (per link above).
3. It was discovered in the court in October 2014 (see here: http://trueeconomics.blogspot.ie/2015/06/11615-full-letter-concerning-ibrc.html)

Add to the above a simple fact: IBRC Liquidators have at their disposal the entire details of all loans issued by Anglo, with their terms and conditions. They also have the entire history of the DIBOR and all other basis rates. In other words, the Liquidators have full access to all requisite information to determine if Anglo (and subsequent to its dissolution other entities holding Anglo loans, including Nama and IBRC Special Liquidators) have continued with the practice of overcharging established by the Anglo.

When you add the above, you get something to the tune of almost 6 years that Anglo, IBRC & Nama and IBRC Special Liquidators had on their hands to address the problem. And only now are they getting to an 'internal review', more than a year after the court has smacked their snouts with it? 

Meanwhile, as it says at the bottom of the letter, "Irish Bank Resolution Corporation Limited (in Special Liquidation), trading as IBRC (in Special Liquidation), is operating with a consent, and under the supervision, of the Central Bank of Ireland."

So we have an entity, supervised and consented to by the Central Bank that is 'looking into' the little pesky tiny bitty problem of years of overcharging borrowers on a potentially systemic basis and with quite nasty implications of this having been already discovered in the courts more than a year ago... It is looking into these thing by itself. Regulators, of course, are looking at something else... while consenting to the IBRC operations all along...

Does that sound like we have a 'new era' of regulatory enforcement and oversight designed to prevent the next crisis?.. Or does it sound like everyone's happy to wait for the IBRC to find a quiet way to shove the problem under some proverbial rug, so the Ship of the Reformed Irish Banking System Sails On... unencumbered by the past and the present?

29/1/16: Events… and oil

Bloomberg recently posted a chart summing up some (although claimed all) of the key events in recent history of oil prices. A neat reminder of what has been happening in terms of oil-related factors for crude demand and supply:

29/1/16: Estonia - A Safer Bet than France?

Euromoney have a good summary article on Baltic states’ economies and sovereign risk ratings (all of which are improving).

My comment toward the end.

http://www.euromoney.com/Article/3524950/Estonia-offers-safer-ption-than-France-or-South-Korea.html

Here is my take on Baltics ratings in full:

Given macroeconomic and geopolitical environment, Estonia's credit rating by all three rating agencies clearly lags overall trends in risks evolution. The geopolitical and external macroeconomic risks these ratings reflect are consistent with early 2015 assessments and are well behind the more recent trends. In simple terms, Estonia is over-due a one notch upgrade across all agencies, as reflective of expected re-acceleration in growth from 1.9 percent estimated in 2015 to 2.6 percent forecast for 2016-2017, and improving labour markets performance and inflation outlook.

Another key driver for the upgrade is significant abatement in geopolitical risks faced by Estonia in the context of the Russian-Ukrainian conflict that has evolved into a localised and frozen conflict with no expected spillover to the broader region.

Estonia also enjoys significant improvements in its terms of trade, via Euro devaluation, which is reflected in its relatively strong current account dynamics.

As far as Latvia and Lithuania ratings go, both countries' present ratings are in line with generally weaker economic, political and social institutions and with long term structural problems at play in both economies. While geopolitical risks have abated for these two countries since the start of 2015, supportive monetary and euro devaluation-driven competitiveness tailwinds are yet to manifest themselves in terms of current account balances and gains in real  productivity.

Unlike Estonia, both Latvia and Lithuania run current account deficits in presence of significantly higher unemployment and continued outflows of human capital. Of the two countries, Latvia is probably closer to a rating upgrade, which can come later in the first half of 2016.

29/1/16: Nama and Value Destruction

There is a neat video circulating around that sums up Mick Wallace's questions about Nama, worth watching: https://vimeo.com/143933468?ref=tw-share.

For those who want to see a more extensive listing of Nama firesales or, as I put them, Value Destruction deals, read here:  http://trueeconomics.blogspot.com/2015/11/251115-nama-that-gift-horses-mouth.html and follow the link in my post to more.

Beyond this, on top of Wallace's questions, there is an outstanding issue of Nama involvement in continued legacy of Anglo interest overcharging http://trueeconomics.blogspot.com/2015/06/17615-mr-john-flynn-letter-to-tds-on.html (and see links at the bottom of that post).

28/1/16: Irish M&As: Not Too Irish & Mostly Inversions

Experian latest figures for *Irish* M&A activities for 2015 show some astronomical number: Per release: “The number of deals on the Irish mergers and acquisitions (M&A) market increased by 10 per cent last year, its strongest performance since 2008…” Which is not what is impressive. Although the overall number of actual transactions hit 458 in 2015, up from 416 the previous year, it is the value of transactions that is beyond any belief.

Again, per Experian: “The total value of transactions reached €312 billion – up from €154 billion in 2014 and by some way the most valuable year for corporate deal making in the country’s history. Activity continues to be driven by the pharmaceuticals and biotech sector.” This number is a third higher than the value of exports of good and services from Ireland over the period of 12 months through 3Q 2015 and it is almost 60 percent higher than Irish GDP. In other words, using normal valuations multiples, you should be able to buy anywhere between 1/4 and 2/5 of entire Ireland on this money. In one go, and forever… And that’s one year worth.

Per Experian: “Irish deals accounted for around 3.6% of the total volume of European transactions in 2015, but 20.5% of their total value. In 2014, the Republic of Ireland again featured in 3.6% of European deals but contributed just 12.7% to their overall value.”

So conservatively, let’s say 1/3 of Ireland bought last year and, say 1/5 in 2014… that’s half the country economy in two years.

But how on Earth can a little country like Ireland attract such a level of financial activity? Why, remember that magic word… ‘inversions’ - yes, that same word that out Government denies applies to Ireland.

Well, Experian provides a small insight (they wouldn’t tell us the full story, but they can’t quite escape from telling us some. Enjoy the following: per Experian, Top 5 “Irish” deals announced in 2015 includedd:

• Pfizer-Allergan at EUR143.564 billion
• Teva Pharma - Generic drug business of Allergan at EUR35.454 billion
• Shire - Baxalta at EUR29.533 billion
• Willis Group Holdings - Towers Watson deal at EUR15.566 billion, and
• CRH - Holcim & Lafarge deal at EUR7.671 billion

So, yep: tax inversion at the top, related to tax inversion at No.2, tax inversion at No.3… and none (repeat - none, including CRH deal) related in any way to Ireland, except for tax domicile of the companies involved.

Repeat with me… “There are no tax inversions into Ireland”… now, with zombie like intonation, please… “There are no…”

27/1/16: Russian Capital Outflows 2015: Abating, but Still High

In two recent posts, I covered Russian External Debt dynamics and drawdowns on Russian Sovereign Wealth Funds. Last, but not least, I am yet to cover capital inflows/outflows for 2015. So, as promised, here is a post covering these.

Based on data that includes preliminary reporting for 4Q 2015, full year 2015 net capital outflows from Russia amounted to USD56.9 billion, composed of USD33.4 billion outflows in the Banking Sector and USD23.5 billion outflows in ‘Other Sectors’. In the banking sector there were simultaneous disposals of some USD28.2 billion of assets and reduction of USD61.6 in liabilities (repayment of maturing debts and deposits).

Thus, 2015 marked the second lowest year in the last 5 in terms of net capital outflows. In comparison, 2014 net capital outflows stood at a whooping USD153 billion and 2013 saw outflows of USD61.6 billion. Net banks’ position improved from outflows of USD86.0 billion in 2014 to outflows of USD33.4 billion in 2015. Other Sectors outflows also improved in 2015. In 2015, this category of outflows amounted to USD23.5 billion, against USD67 billion in 2014. 2015 marked the slowest outflows year in this sector in 8 years.

Chart to illustrate dynamics:

On a quarterly basis, net capital outflows from Russia in 4Q 2015 are estimated at USD9.2 billion, down from USD76.2 billion in 4Q 2014. Capital outflows were lower in every quarter of 2015 compared to corresponding quarter of 2014 and in 3Q 2015 there was a net capital inflow of USD3.4 billion - the first net inflow in any quarter since 2Q 2010.

So on balance, Russian capital outflows remain strong, but are abating rapidly. Most of the outflows is accounted for by the deleveraging of the Banks followed by shallower deleveraging of the ‘Other Sectors’.