August 08, 2022 09:13 GMT
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- This week, investors will closely watch China aggregate financing data, expected to increase by 1.3tr CNY in July.
- Even though the July data is expected to be significantly lower than the 5.17tr CNY increase we saw in June, it will still lead to an increase in the annual change in Total Social Financing (TSF).
- We previously saw that the significant rebound in China ‘liquidity’ since the start of the year has been pricing in a recovery in global risky assets.
- The bottom chart shows that the annual change in China Total Social Financing (TSF) has strongly led global equities (MSCI) by 6 months in the past cycle.
- However, the looser policy adopted by China officials may barely be enough to stimulate the domestic real economy (and domestic asset prices) this time.
- China economic growth forecasts for 2022 have been constantly reviewed to the downside due to the zero-Covid policy.