JINYUE DONG & LE XIA (BBVA Research) | The PBoC started to exit the above easing measures in May 2020 when the Covid-19 pandemic got controlled in mainland China. Historically, the exit of easing monetary measures in the post-crisis time has always been a global challenge to central banks. China is not an exception in this respect. In February 2021, the normalization progress in China led to the gyration of the interbank interest rate in February 2021, just before the Chinese Lunar New Year as the investors’ fear of the authorities’ fast tightening climbed to a new high.
Chinese equities are responding positively to the macro tailwinds. The S&P China 500 Index – a diversified index which includes both onshore and offshore listings – is up nearly 31% year-to-date. This compares to the S&P 500 Index which is up around 13% over the same period. These are encouraging signs for those interested in Chinese equities – strategic and tactical investors alike.
Jinyue Dong, BBVA Research ! On November 15th, Asia Pacific nations including China, Japan, South Korea, Australia and New Zealand plus 10 countries of ASEAN signed the world’s largest regional free-trade agreement which is the so-called Regional Comprehensive Economic Partnership or RCEP, with the member countries encompassing 2.2 billion people that is nearly a third of the world’s population and USD 26.2 trillion GDP as around 1/3 of the world GDP as well as 1/3 of world’s total trade volume. Top officials from 15 nations inked the RCEP nearly a decade in the making on the final day of the 37th ASEAN Summit hosted virtually by Vietnam this year. The completion of negotiations is a strong message affirming China, Eastern Asia and ASEAN’s role in supporting the multilateral trade system. In addition, the agreement will contribute to developing supply chains that have been disrupted due to the Covid-19 pandemic and the China-US decoupling, as well as supporting the regional and world economic recovery. Obviously, the signing of RCEP which has experienced eight years of negotiations among member countries has essential implications on Chinese and regional economy…
Unemployment in China, which rose to 6.2% in February, is down to 5.4% in September – only marginally higher than 5.2% in December 2019. Industrial production increased 6.9% year on year in September – the highest increase since December 2019. This data point has vindicated the strong recovery in Purchasing Managers Indices (PMIs) – which are important, but only show month on month change in activity. Retail sales – an important barometer of consumer wellbeing – have also bounced back and risen by 3.3% year on year in September after being negative between January and July this year.
Jinyue Dong / Betty Huang (BBVA Research) | A batch of economic activity indicators announced yesterday by the National Bureau of Statistics pointed to a continuing growth momentum in August. Industrial production, fixed-asset investment and retail sales all showed remarkable improvement from their previous month’s readings and beat the market consensus.
By Kevin Flanagan, (Head of Fixed Income Strategy, WisdomTree) / This year has got off to an unusual start in the financial markets. Typically, the focus would be on the Federal Reserve (Fed) and/or economic developments, but unfortunately the coronavirus has taken centre stage. I thought it would be useful to offer some insights from a bond market perspective, using the SARS (Severe Acute Respiratory Syndrome) outbreak of November 2002 to July 2003 as a comparative event.____¨
The People’s Bank of China pumps 1.2tn yuan into the financial system to protect the economy from the coronavirus Global stocks extended their rally last week despite concerns that the coronavirus will slow global growth. Experts at Julius Baer continue to argue that stocks are susceptible to a short-term correction and consider any weakness as an entry opportunity for long-term investors.
Christian Gattiker (Julius Baer) | Policymakers in China made a credible move in their attempt to regain control over the current situation. After injecting liquidity into financial markets, they announced the potential for a cure/vaccination available soon and later cut some tariffs on US imports. Fear-stricken markets took a sigh of relief.
The world has changed a lot because China has changed a lot. China’s share of global GDP has risen from a negligible 2% in 1990 to 15.9%. Meanwhile, the other powers have fallen in that period: Japan, from 14 to 5.8%; Europe, from 35% to 21.9%; and the USA, from 27% to 23.9%, according to Weltbank data. So hundreds of thousands of jobs in Germany are now dependent on China. And all over the world, because China today accounts for 1/3 of world growth.
Dave Yin (Caixin) | China is making major revisions to its antitrust law for the first time in more than 11 years to give it more teeth while reining in the dominance of the country’s internet goliaths.China is making major revisions to its antitrust law for the first time in more than 11 years to give it more teeth while reining in the dominance of the country’s internet goliaths.