https://www.linkedin.com/feed/update/urn:li:activity:7125100238872215552/?originTrackingId=wvd6wy9ORF24DQHMqiL%2F%2Fg%3D%3D
1. Waiting for the Bank of Japan’s decision. What is expected from the Bank of Japan?
There is a good chance that BOJ will hint about dropping YCC, but I do not believe it will raise its inflation projection to so aggressively. This is because abandoning YCC entirely would likely see Japanese bond yields rise and add to pressure on global markets already bruised by a vicious sell-off in U.S. Treasuries. Expect BOJ to act cautiously this time
2. Postponing Evergrande’s liquidation hearing...what does it mean?
Most of Evergrande bondholders probably favors this postponement since a restructuring plan would result in a better recovery than a liquidation.
Evergrande has about $240 billion in total assets. Considering its size, liquidation of Evergrande will have ripple effects across already unstable capital markets.
So no one really wants to see it liquidated. But, as of right now, I don't think Evergrande could present a better plan. So the likely outcome will be that there is a very high chance it will end up being liquidated.
3. More than 34% of Chinese companies consider purchasing their shares to what extent they will improve market movements
It is believed that China’s National Team has been buying shares more frequently and some expect it will support rebound towards year-end. This is evidenced from the fact that top five ETFs favored by the National Team surged by US$12.3 billion in net subscriptions in August.
But despite this push the stock market is not rebounding. I think investors should stay cautious. Any move to artificially push the market will prove to be ineffective.
4. Watch the PMI data from China, what to expect
We should expect a modest improvement in the PMI data from China given that recent stimulus programs are boosting confidence as policy makers try to stabilize economy.
Since June, officials have implemented a wide range of supportive policies. Last week, China's upper house of parliament approved a bill allowing local governments to front load a portion of their 2024 bond quotas, as well as approving a 1 trillion-yuan national bond issue for the fourth quarter. But I do not believe this may enough for the government to hit its annual growth target of 5%. China’s problem requires a structural change which requires longer time to implement.
https://www.linkedin.com/feed/update/urn:li:activity:7125100238872215552/?originTrackingId=wvd6wy9ORF24DQHMqiL%2F%2Fg%3D%3D
1. Waiting for the Bank of Japan’s decision. What is expected from the Bank of Japan?
There is a good chance that BOJ will hint about dropping YCC, but I do not believe it will raise its inflation projection to so aggressively. This is because abandoning YCC entirely would likely see Japanese bond yields rise and add to pressure on global markets already bruised by a vicious sell-off in U.S. Treasuries. Expect BOJ to act cautiously this time
2. Postponing Evergrande’s liquidation hearing...what does it mean?
Most of Evergrande bondholders probably favors this postponement since a restructuring plan would result in a better recovery than a liquidation.
Evergrande has about $240 billion in total assets. Considering its size, liquidation of Evergrande will have ripple effects across already unstable capital markets.
So no one really wants to see it liquidated. But, as of right now, I don't think Evergrande could present a better plan. So the likely outcome will be that there is a very high chance it will end up being liquidated.
3. More than 34% of Chinese companies consider purchasing their shares to what extent they will improve market movements
It is believed that China’s National Team has been buying shares more frequently and some expect it will support rebound towards year-end. This is evidenced from the fact that top five ETFs favored by the National Team surged by US$12.3 billion in net subscriptions in August.
But despite this push the stock market is not rebounding. I think investors should stay cautious. Any move to artificially push the market will prove to be ineffective.
4. Watch the PMI data from China, what to expect
We should expect a modest improvement in the PMI data from China given that recent stimulus programs are boosting confidence as policy makers try to stabilize economy.
Since June, officials have implemented a wide range of supportive policies. Last week, China's upper house of parliament approved a bill allowing local governments to front load a portion of their 2024 bond quotas, as well as approving a 1 trillion-yuan national bond issue for the fourth quarter. But I do not believe this may enough for the government to hit its annual growth target of 5%. China’s problem requires a structural change which requires longer time to implement.