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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.
EMERGING MARKETS
- Since the start of the year, we have seen that not only PBoC assets have been decreasing (down 700bn CNY since January), but also China Total Social Financing (TSF), which could be seen as a a broad measure of the country's liquidity and credit, has been contracting significantly.
- The first chart below shows that the annual change in China TSF 12-month sum fell from 10.2tr CNY in October 2020 to 5.8tr CNY in March 2021.
Source: Bloomberg/MNI
- China TSF has shown some strong co-movement with some commodities heavily relying on China's demand (i.e. copper) and has also acted as a strong lead for business surveys (i.e. manufacturing PMI) and also for some international asset classes.
- For instance, the chart below shows that falling China TSF has generally been associated with weaker Euro against the US Dollar in the past 6 years.
- Could further decrease in the aggregate total social financing become a problem for the market in the months to come, leading to a preference for traditional safe such as the US Dollar?
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.
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