- In the past week, business sentiment has started to pick up in China following the positive headlines on China ‘declaring victory’ on Covid.
- Hence, investors have been questioning if risky assets and CNY could receive support in the short term if soft data continue to improve.
- China 10Y Yield could also see further upward retracement in the current environment.
Link to full publication:
In the past week, business sentiment has started to pick up in China following the positive headlines on China ‘declaring victory’ on Covid. The National Health Commission announced on Tuesday that China will slash the quarantine time for inbound travellers by half (from 14 to 7 days) and will cut the at-home health monitoring from 7 to 3 days.
PMI surveys are out in the coming days and are expected to bounce back above the 50-line threshold that separates growth from contraction. For instance, ‘official’ manufacturing and non-manufacturing PMIs are expecting to rise to 50.5 (June 30) according to analysts.
Investors have started to question if China tech could experience a short-term rally in the coming weeks. We previously saw that tech equities have not responded to the strong rebound in China ‘liquidity’ since the start of the year. The chart below shows the significant divergence between year-on-year change in tech equities and China TSF (also referred as ‘liquidity’).