Displaying items by tag: China

Tuesday, 09 August 2022 02:45

Tech Stocks Driving Asia-Pac Down

Tech stocks are suffering and pushing the Hong Kong broad market index lower early this week. Companies like Alibaba and JD.com were driving this slump. Overall, economic data has been positive for China though. The latest report showed that dollar-based exports grew by almost 20% in July. The region as a whole is experiencing diverging patterns in equity performance as South Korea and China excluding Hong Kong both grew. Still with currency risk higher than usual as a direct result of Fed tightening and higher inflation emerging market investors are having a difficult time finding North in the current environment.


Finsum: If covid is starting to slow as a result of the climate it could be great for countries relying on trade. 

Published in Eq: Asia

China has another Covid-19 outbreak that could potentially shut down Beijing in the same way that the world saw a lockdown in Shanghai previously. This outbreak is sending a shockwave across all assets that are spiking volatility. The VIX hit its highest point since mid-March, and there was a mild reservation in the bond market. 10-year treasury yields spiked 14 basis points. Bonds and equities aren’t even the whole stories; everyone knows commodities are in a super cycle, but this outbreak is putting that at risk. A variety of different commodities' prices fell in response. Finally, Wall Street is starting to be concerned that a global recession is a possibility with Ukraine-Russia ongoing, Covid surging, and serious inflation risk.


Finsum: The yield curve is also starting to turn which could be really bad for equities markets.

Published in Eq: China

Just after many Wallstreet firms were predicting oil prices to skyrocket passed $130 the jets have started to cool and oil prices are falling. Oil dipped below $100 a barrel this week and the two biggest factors are demand destruction and China’s latest Covid-19 outbreak. In the U.S. the Ukraine war and high gas prices are deteriorating the demand for commodities and demand is beginning to weaken which in turn affects energy prices. Demand will drop by 1.4 million barrels a day according to Rystad Energy. Additionally, the U.S. is a strong dollar is making it hard to purchase oil-backed goods abroad. China’s lockdown in Shanghai drastically reduces global demand and could be a threat in the intermediate future. If Bejing follows suit it could be devastating.


Finsum: Oil investors should watch out for Russia, which is starting to feel the pressure on its economy.

Published in Eq: Energy
Monday, 08 November 2021 17:03

China Is Hoarding Dollars

China has banked an inordinate amount of U.S. dollars in the last couple of months as trade surpluses and inflows flow into its bond market. The Chinese trade surplus through September was about $100 billion larger than its 5 year average preceding the pandemic. This current account will provide a buffer against any foreign debt problems regardless of any economic situations China faces this year. The current account surplus could allow China to deleverage its corporate debt market, particularly in real estate, which has faced a difficult bond market. China’s dollar holdings have allowed the yuan to appreciate like other emerging market currencies, such as in Russia and Columbia. Holding greenbacks is a bet on a growing U.S. Economy, and could help China hedge their slower growth.


FINSUM: The large current surplus could mean myriad things for China, but it could also just be another symptom of the global economic disruption due to Covid-19.

Published in Bonds: EM
Monday, 11 October 2021 20:56

Bond Investors are Flocking Here

(New York)

Investors in India have by in large part stayed away from their own high yield corporate bonds, but wary investors from China have done the opposite. India’s high yield bond issuers set a $9 billion-dollar record from international investors which tripled last year’s inflows. Many of these investors are coming from China, specifically Evergrande, whose liabilities alone double India’s entire corporate debt market. Many investors are worried that other sectors in China’s economy may come to suffer from Xi Jinping’s ‘common prosperity’. In the meantime, there are still risks to India’s debt, most notably energy prices, as India imports most of its energy. Higher energy prices increase input costs, which could cut margins.


FINSUM: Developing countries outside China are all receiving inflows in corporate and non-corporate debt investments with China’s turmoil.

Published in Bonds: EM
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