The HK dollar is under an assault from rising US interest rates and a weak economy. To defend the exchange rate peg, the HKMA will continue to tighten liquidity, which will boost HK interest rates above those in the US across the…
China’s October trade data was a big miss. Exports is USD terms contracted by 0.3% y/y following 5.7% y/y in September, below expectations of a mild deceleration to 4.5%. Similarly, imports contracted by 0.7% y/y following…
Chinese equities are starting November on a positive note. The Hang Seng and CSI 300 are up 10% and 7.4% respectively since the beginning of the month. In particular, tech stocks have been outperforming, with the Hang Seng Tech…
Copper markets will remain tight on the back of growing physical deficits and pressure on capex. Policy-rate increases by central banks, uncertainty over re-opening in China and its fiscal-stimulus plans in the short run restrain…
Provided that US inflation is due to excess demand rather than supply constraints, demand destruction will likely be needed to bring core inflation below 3.5%. Such growth contraction is positive for counter-cyclical currencies like…
The predominant risk to China’s economy is demand-driven deflation. Very weak demand-side data highlight that a lack of demand, rather than supply-side improvements, is driving disinflation in China. Core and service…
China's economy is about to experience demand-driven deflation. The lack of an economic recovery and falling producer prices will depress corporate profits and, hence, share prices. Beijing will allow the yuan to depreciate more to…
The Chinese manufacturing PMI from the National Bureau of Statistics contracted anew in October, after briefly improving above the 50 boom-bust line in September. The headline index decreased from 50.1 to 49.2, missing…
Stay short Greater China assets. Stay long Japanese yen. Hold back on Brazil for now but look forward to opportunities in future.
Chinese industrial profit growth continues to shrink, down 2.3% ytd y/y in the first three quarters of 2022. The weakness is particularly pronounced among downstream sectors. Profits of manufacturers contracted by 13.2% ytd y/…