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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.
CHINA
- Recently, we have seen that the deceleration in the Chinese economy (Li Keqiang Index has been falling since February) combined with the sharp contraction in liquidity have been weighing on the domestic asset prices, especially equities.
- The chart below shows that the annual change in Chinese 'liquidity', which we define as the 12M sum of Total Social Financing, has shown a strong relationship with the yearly change in China tech stocks; the sharp contraction in liquidity is currently pricing in further weakness in the IT equity sector in the near term, which is already down 25% since mid February.
Source: Bloomberg/MNI
- Interestingly, while China tech stocks have remained nearly flat in the past four months (slightly up, blue line), healthcare stocks have been recovering sharply and and currently breaking to new record highs.
- The chart below shows that healthcare stocks (candlesticks) were down over 26% during their February/March drawdown before starting to trend again.
- Can the momentum in health care stocks continue considering their 'expensive' valuation? (China healthcare equities have a price-to-book ratio of 7.26, versus 1.51 for China MSCI index)
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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