In today’s briefing:
- Macro Watch – Everything Related to the Deposit Crisis Keeps Worsening Beneath the Hood
- FSC to Reduce CFD Derivatives Transactions in Korea
- The Week That Was in ASEAN@Smartkarma – Sea Ltd Buoyant, Grab Delivering, and DXN IPO
- China Recovery – Real Estate
- Comment on Exchange Rate EUR/USD – March 31, 2023
- Significant Looming Gyrations in US Banking Liquidity as Reserves Approach Key Threshold
- CX Daily: Court Ruling Sets Off Debate About Bond Fraud Compensation
Macro Watch – Everything Related to the Deposit Crisis Keeps Worsening Beneath the Hood
- Given a lack of an imminent economic crash risk, bond bears have been back in the driver’s seat.
- No news is bond bearish news, which in turn is likely to exacerbate the already worsening root cause of the deposit/bank crisis.
- We are on high alert for the ramifications of the price action in the USD.
FSC to Reduce CFD Derivatives Transactions in Korea
- Due to the recent crash in numerous Korean stocks related to the CFDs, FSC announced that it plans to restrict the amount of leverage related to CFD products.
- CFDs will be considered as personal credit extensions and thus should be included in the credit limit of securities companies.
- Given the propensity of retail investors to be net-long, the greater restriction on the credit limit of securities limit could add to further selling pressures on the Korean stock market.
The Week That Was in ASEAN@Smartkarma – Sea Ltd Buoyant, Grab Delivering, and DXN IPO
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
- The past week so insights on Sea Ltd (SE US) and Grab Holdings (GRAB US) post results plus insights on Golden Energy & Resources, Penguin International, and DXN Holdings IPO.
- There was also a macro Insight looking at post-election Thailand from Manu Bhaskaran plus an insight looking at the Vietnamese construction sector.
China Recovery – Real Estate
- Until April, China A shares saw sustained Northbound Inflows.
- In January 2023, foreign investors invested a record $100 billion in China A shares.
- This was more than 2022, which was $90 billion. We have started to see some outflows in May, but this is yet to be a trend.
Comment on Exchange Rate EUR/USD – March 31, 2023
- The EUR/USD exchange rate has moved upwards with significant fluctuations over the course of March 2023.
- As it can be observed in the main graph (Graph 1), there was a period of fluctuations in the exchange rate but with a steady upward trend.
- The exchange rate fluctuated significantly over the course of the month reaching a high of 1.0901 on March 30th.
Significant Looming Gyrations in US Banking Liquidity as Reserves Approach Key Threshold
- Bank reserves have fallen since December 2021 towards the lowest comfortable threshold deemed by the Fed. Renewed Treasury borrowing will intensify the downward pressure in the coming months.
- Lower debt issuance by Federal Home Loan Banks in the coming months will help to boost money market funds’ participation in the Reverse Repo Programme, thereby reducing bank reserves.
- Rising stress in the repo market in September 2019 prompted the Fed to buy T-bills. The Fed could repeat its 2019 response, but this action would not constitute quantitative easing.
CX Daily: Court Ruling Sets Off Debate About Bond Fraud Compensation
- Bonds /: In Depth: Court ruling sets off debate about bond fraud compensation
- Ukraine /: Chinese peace envoy meets Zelenskyy in Ukraine
- Regulator /: China deploys former Everbright chairman to new financial commission
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