🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Four Signs Of Rising Financial Stress In China

Published 12/19/2016, 08:24 AM
Updated 05/14/2017, 06:45 AM

Lately we have seen rising signs of stress in China - showing up in four places:

Bond yields have shot higher
While still low, the pace of the sell-off is worth watching.

Equity markets have sold off again
The CSI300 onshore index is down more than 6% from the peak in late November.

CNH money market rates are back at January-highs, in a sign of offshore intervention.

Capital outflows have increased again lately
Recent data on the FX reserve and FX payments point to a pick-up in outflows.

While signs of stress are rising, they are not broad based as, for example, the CNY basket has been fairly stable. Credit spreads are also still very tight, despite the latest increase.

Nevertheless, this development bears watching. If stress continues, markets will quickly recall what happened in January last year shortly after the Fed hiked, and outflows could pick up further.

We see a clear risk that global markets have become too complacent about Chinese risks and that financial turmoil in China could resurface in 2017. Slowing growth, increasing financial imbalances and rising tensions with the US strengthen the risk.

To read the entire report Please click on the pdf File Below

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.