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.
Executive summary
- China ‘liquidity’ is expected to continue to increase in April; however, global risk off environment driven by the surge in stagflation risk combined with the geopolitical uncertainty leaves risky asset vulnerable in the near term.
- China remains the ‘cheapest’ equity market among the EM world using a price-to-book z-score approach.
- The easing policy signals combined with the rise in liquidity have been mostly impacting the Chinese yuan, which is now down over 5% since mid April.
Link to full publication:
This week, the PBoC is expected to release its April update on the aggregate financing data, which is expected to rise by 2.2tr CNY after a 4.65tr CNY jump in March (top chart).
China annual change in ‘liquidity’, which we define as the annual change in the Total Social Financing (TSF) 12M sum, is expected to continue to rise, increasing to 667bn CNY (up from a record low of -5.1tr CNY reached in October 2021). Even though the rise in liquidity should be strongly supporting risky assets (particularly ‘liquidity sensitive’ sector such as tech), the global risk off environment has left China equities vulnerable. The bottom chart shows that China tech stocks have been performing poorly despite the rebound in liquidity since the start of the year.
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.