MNI MARKETS ANALYSIS: Chinese Equity Headwinds

Chinese equities have struggled in the early part of this week, with idiosyncratic headwinds at the fore. Sino-U.S. tensions are well documented, but the latest regulatory tussle centring on offshore Chinese equity listings was the first real warning shot for investors.

• Since then, the clampdown on the private tutoring sector and headwinds for TenCent have garnered the most attention. Core tenants of Chinese policy must be assessed here.
• In terms of broader financial markets, the contagion into the wider global equity space will be eyed (this has been relatively limited thus far). USD/CNH has moved to multi-month highs on the latest round of downward pressure for equities, after H121 saw the yuan draw support from its carry appeal, first to emerge from the shadow of COVID status and capital flow dynamics surrounding Chinese bond inclusion in the major global bond indices.
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