In today’s briefing:
- Hang Seng Index, Tencent, HSBC, HKEX, and Alibaba
- Geopolitics Exacerbate Risks from Global Liquidity Contraction as Easy Money Legacies Loom Large
- BoE: Calmed by Lower Inflation Peak
- CX Daily: Why China’s Regulators Have Cough Medicine in Their Sights
Hang Seng Index, Tencent, HSBC, HKEX, and Alibaba
- After last week’s Bear Porn note, this explains best the focus of the note.
- We have a critical few weeks ahead of us as we open with a gap down on the index and many stocks on Thursday 22nd.
- However, I think I will focus on just a few things that matter most, the four essential heavy weights and, last but not least, the long-term chart of the Hang Seng Index.
Geopolitics Exacerbate Risks from Global Liquidity Contraction as Easy Money Legacies Loom Large
- Central banks are trying to catch up with the Fed, but the US dollar remains strong. The Fed will not be swayed from its hawkish stance to restore price stability.
- The restoration of normal supply chains since the pandemic has been severely hampered by the willingness of Western countries to embrace tariffs and sanctions to pursue geopolitical interests.
- Corporate bond issuers face higher funding costs due to quantitative tightening, but the ECB faces tougher challenges than the Fed in this realm of policy conduct.
BoE: Calmed by Lower Inflation Peak
- The BoE hiked by another 50bps to 2.25%, as economists (including us) expected, rather than the 75bps risk embedded in market pricing. Dissent split on both sides of this.
- Further forthcoming fiscal stimulus will likely encourage the BoE to forcefully hike again in November before slowing as the 2yr inflation outlook rolls below the target.
- Active gilt sales are beginning, but a hurdle to change outside of annual reviews means the programme is worryingly unresponsive to the economy’s requirements.
CX Daily: Why China’s Regulators Have Cough Medicine in Their Sights
Drugs / In Depth: Why China’s regulators have cough medicine in their sights
Corruption / Former justice minister given suspended death sentence
Yuan / China and Kazakhstan set up offshore yuan clearing
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