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As The World Tightens, China Prepares To Ease

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Asian equity markets were off following yesterday’s US equity market meltdown, as Australia reopened with a thud while China and Hong Kong outperformed.
Asian equity markets were off following yesterday’s US equity market meltdown, as Australia reopened with a thud while China and Hong Kong outperformed. Both Hong Kong and China were down nearly -2% before rallying later in the day. Mainland investors were buyers of Hong Kong stocks, especially Meituan and, to a lesser degree, Tencent, Kuaishou, and Li Auto. Tomorrow marks the anticipated 10 bps cut to the Medium-term Lending Facility (MLF) along with the release of May industrial production and retail sales data. Markets are expecting decent May figures, which will allow for 1 & 5 Year Loan Price Rates to be cut again over the weekend. Foreign investors bought a respectable $585mm of Mainland stocks via Northbound Stock Connect. Brokers rallied after the CSRC denied reporting that foreign bankers’ pay would be supervised. As I mentioned on Twitter yesterday (@ahern_brendan), US-China ADRs were at steep discounts to their Hong Kong close yesterday.

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