Market Recap 8/14/2019 – View on Chinese Market


CNYUSD depreciation factor:

(1) trade war causes the pressure on China export. PBoC is willing to ease the CNY to support the export.

(2) PBoC may have rate cut to support the economy if needed

CNYUSD anti-depreciation factor:

(1) spread of 3 month SHIBOR – LIBOR is close to zero, and expect to enlarge when Fed put more rate cut.

The China policy maker’s headache:

(1) intervening in currency markets to offset market pressures risking a new wave of reserve depletion;

(2) raising interest rates to defend the currency causing monetary tightening and risking economic weakness;

(3) let the currency depreciate along with market pressure risking capital outflows and a more abrupt move.

Fund Flow

Equity outflow and bond inflow become very significant

More utility sector inflow.


OW Utility, Gold. Keep close eye on China Equity

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: