In today’s briefing:
- EM Watch: Time to play the long end of the Chinese yield curve?
- EV War Hots Up; China Firms Branch Out To Outside Countries
- CX Daily: Punishing People for Their Relatives’ Crimes Comes Under Scrutiny in China
- China Banking Stress Tests
- Heard From Fortress Hill: Weekly Market Observations (20 Sep 2024)
- HEW: Fed Risks Forcing a Failure to Land
- Vietnam’s Equities Poised To Recover On The Back Of Potential Market Upgrade And Easing Overhang
- [ETP 2024/38] Oil Rises on Fed Rate Cut and Geopolitics; Nat-Gas Gains on Warmer Forecasts
- Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 20 Sep 2024
- Japan Policy Rate 0.25% (consensus 0.25%) in Sep-24
EM Watch: Time to play the long end of the Chinese yield curve?
- Welcome to our weekly EM Watch, where we examine Emerging Markets (with a particular focus on China) from the perspective of Western investors.
- It continues to be a rough month for anything linked to China.
- We have observed early signs of stabilization in China’s pollution data, which may indicate some level of stability at lower levels of industrial output.
EV War Hots Up; China Firms Branch Out To Outside Countries
- US ADD measure expected to be in force from Sept 27
- Bombarded by Chinese exports Canada too join ADD league
- Tesla exports from China faces ADD in Canada, EU excuses
CX Daily: Punishing People for Their Relatives’ Crimes Comes Under Scrutiny in China
- Punishment / In Depth: Punishing people for their relatives’ crimes comes under scrutiny in China Legal experts in China are pushing to reform a longstanding practice that can cause law-abiding citizens to lose their shot at joining the civil service, getting into certain university programs or the military if they happen to be related to a convicted criminal.
- The reform push has the potential to curtail the practice — known as collective punishment — that has been criticized for violating basic legal norms and putting a large proportion of China’s population at risk of being punished for the actions of another.
- FINANCE & ECONOMY PwC / PwC Hong Kong next in firing line over Evergrande scandal Penalties and lawsuits loom over PricewaterhouseCoopers’ (PwC) Hong Kong affiliate after China slapped its mainland counterpart with a record penalty last week for its fraudulent accounting for Hengda Real Estate Group Co.
China Banking Stress Tests
- China’s 19 major domestic systemically important banks hold up well under most solvency and liquidity tests, though some capital shortfalls appear with a moderate or severe NPL sensitivity shock scenario.
- The safety net would likely be capital injections including from central government as occurred with the largest 4 banks in 1997-04 or takeover and mergers.
- However, small and mid-sized banks shortfall of capital in the more severe sensitivity would test China authorities crisis management and response capacity.
Heard From Fortress Hill: Weekly Market Observations (20 Sep 2024)
- This week’s main mover is Fed’s surprised rate cut by 50bps. It shakes the market first day it came out and has a positive effect on following day trading.
- While S&P500 is up 1.97%, Hang Seng glitters with a 5.55% increase and break through the technical resistance at 18,000.
- We believe after the Fed rate hike, the entire Hong Kong stock market has changed. With the break through upward of 18,000, Hang Seng can go on to challenge 20,000.
HEW: Fed Risks Forcing a Failure to Land
- The Fed made a forceful 50bp rate cut despite data resilience, with concerns of over-easing due to excessive focus on politics and labour demand. Meanwhile, Brazil has begun reversing its rate cuts and the BoE is exercising caution.
- Next week, the dovish focus will shift to the SNB, Riksbank and Bank of Mexico. Fed speakers may moderate dovish extrapolated pricing after strongly encouraging it.
- Key inflation highlights to watch out for are France and Spain’s Flash HICP for September and the US PCE for August.
Vietnam’s Equities Poised To Recover On The Back Of Potential Market Upgrade And Easing Overhang
- Vietnam is streamlining transactions for foreign investors through market reforms as it seeks reclassification from frontier to emerging market status, a change that could drive substantial inflows into its equities.
- Vietnam’s strategic location, low labor costs, and “China Plus One” strategy make it a key player in global manufacturing. Strong domestic growth suggests equity upside.
- The iEdge Vietnam 30 Sector Cap Index provides exposure to Real Estate, Financial Services, and Manufacturing. The index’s forward P/E of 13.65 suggests strong earnings growth ahead.
[ETP 2024/38] Oil Rises on Fed Rate Cut and Geopolitics; Nat-Gas Gains on Warmer Forecasts
- For the week ending 13/Sep, US crude inventories dropped by 1.6m barrels, surpassing the expected 0.2m barrel decline. Gasoline stockpiles grew less than forecasted, while distillate inventories rose more.
- US natural gas inventories rise 58 Bcf for the week ending 13/Sep, more than analyst expectations of a 53 Bcf buildup. Inventories are 8.6% above the 5-year seasonal average.
- Chevron, Occidental Petroleum, and Exxon Mobil see target price cuts. DBS Bank initiated a Buy rating on Schlumberger and Halliburton.
Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 20 Sep 2024
- The Fed’s unexpected 50 basis-point rate cut has raised concerns about U.S. economic stability despite strong GDP and CPI figures.
- Interest rate cuts are expected across Asia, particularly in Indonesia, Korea, and Thailand, but India remains stable.
- Malaysia’s imports surged, signaling economic recovery, while Vietnam’s pro-growth leadership and upcoming projects boost its economic outlook.
Japan Policy Rate 0.25% (consensus 0.25%) in Sep-24
- The BOJ maintained its policy rate at 0.25%, consistent with expectations, sustaining globally accommodative financial conditions to support economic growth and wage inflation.
- Global economic conditions, domestic inflation trends, wage-price dynamics, and exchange rate fluctuations will influence future interest rate decisions.
- The BOJ’s current stance reflects a gradual approach to inflation management, focusing on monitoring wage growth and price stability before making significant policy adjustments.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
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