Displaying items by tag: asia
China Pledges to Support Markets at Any Cost
(Beijing)
Beijing made a big proclamation yesterday. The country is in the midst of a brutal bear market—its benchmark Shanghai Composite has fallen 27%—but yesterday the government made a big announcement. It said that it would do “whatever it takes” to stop its falling stock market. A large pledge of support came from Xi Jinping himself, which given his grip on power, means that it can likely be counted on. One analyst thinks the bear market might be nearing its end, saying “Bottoming is a process, and we’re starting to see some evidence of reversals and lows taking shape”.
FINSUM: The big x-factor for China is that a trade war and tariffs hurt them much worse than the West, so it is very hard for us to agree that the market rout there is ending.
Chinese Stocks are Plunging
(Beijing)
If we think the trade war is being rough on our markets, just take a look at China. The country’s benchmark Shanghai Index is down 22% since its peak in January, and the yuan is dropping as well. In addition to Trump’s rhetoric and the threat of a trade war, China is also seeing weakening domestic economic data.
FINSUM: China is a lot more exposed to the trade war than the US. It has less broad and deep financial markets, so there are not as many places for investors to hide, and its economy is much more export-reliant, making it more vulnerable to tariffs.
The Next Big Short is Here
(Washington)
The Chinese stock market is now in a bear market and there is a great deal of pressure on its currency. Last time there was this much pressure, in 2015, the market broke, with stocks plunging and the yuan devaluing by 7% over the year. US stocks even plunged in fear. Now, the situation looks like it might occur again, causing some to call the yuan the next “big short”. The currency is already down almost 1% since Friday, and is in negative territory for the year. A burgeoning trade war with the US is adding pressure.
FINSUM: So the one big support for the yuan is the current strength of the Chinese housing market, which has been strong recently (a big contrast to 2015). That seems like it will keep a blow out from happening.