Free Trial
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CHINA
- Last year, we saw that the significant deceleration in Chinese economic activity combined with the contraction in liquidity (TSF 12M sum) have been weighing on domestic risky assets, and especially equities.
- The Hang Seng Index (HSI) is down over 25% since its peak reached in February 2021 (which also corresponds to the peak in the Chinese economic activity) and still looks vulnerable in the short term despite the easing policy measures announced by China officials in the end of last year.
- The market is pricing in further cuts from the PBoC following the two 50bps cuts we saw in 2021, in aim to loosen financial conditions, stimulate domestic asset prices and potential weaken the CNY, which has been constantly strengthening against major crosses in the past 18 months.
- In addition, we could see a rebound in Chinese liquidity after the sharp contraction last year, which could also act as a strong support for domestic and some international ‘China-sensitive’ assets in the coming months.
- However, investors do not seem to be convinced by the easing measures announced by some Chinese officials as the strict ‘Zero Covid policy’ could continue to significantly weigh on growth expectations this year.
- The HSI rejected its 23,506.10 resistance this week (76.4% Fibo retracement of the 21,139.30 – 31,169.30 range) and has been testing new lows this week, gradually approaching its Dec 20 low at 22,665.30.
- Next support to watch on the downside stands at 22,350, which corresponds to the low of its LT downward trending channel (see chart).
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok