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Copper Net Specs: Smart Money Is Following Chinese Liquidity

COMMODITIES
  • Net specs positions on copper have significantly fallen since the start of the year as investors are worried that the global reopening will not be enough to offset the contraction in Chinese 'liquidity', which we define as the annual change in Total Social Financing (TSF) 12M sum.
  • 'Smart money' investors seem to follow China liquidity and therefore have been reducing their exposition to risky assets in recent months.
  • This chart shows how strongly China YoY change in liquidity has co-moved with copper net specs position in the past 7 years.

Source: Bloomberg/MNI

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