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Yahoo
2 days ago
- Business
- Yahoo
Chinese Stock Market in Limbo as Investors Lack Conviction
(Bloomberg) -- Chinese stocks have been notably calm during the recent bout of global market volatility, as investors opt to stay on the sidelines until there is clarity on tariffs and domestic stimulus. NY Wins Order Against US Funding Freeze in Congestion Fight The CSI 300 Index has moved less than 0.5% in half of the sessions over the past month. Turnover has drifted lower as traders avoided building leveraged positions. With the broader stock market lacking direction, investors are flocking to either safer fixed-income products or riskier small-cap stocks to boost returns. 'Market direction is uncertain because there's a lack of good news, though there's also no major negative catalyst' after the US-China tariff truce, said Xin-Yao Ng, investment director at Aberdeen Investments. 'I find it hard to grasp the direction on beta currently, but there are still some good stock picking opportunities.' While the market's stability may be a sign of resilience, it more likely reflects waning enthusiasm for Chinese stocks as economic headwinds build. US tariffs on Chinese goods can shoot up again once the 90-day negotiation window ends in August. Beijing has taken a piecemeal approach to stimulus this year, disappointing investors who had been anticipating stronger policy support for the economy. Here are some indicators that show cooling trading sentiment. Price swings have eased to levels last seen before the People's Bank of China reignited animal spirits with its stimulus blitz in September. The CSI 300 Index's 30-day volatility is hovering at around eight points, the lowest since July 2024. For the market to break such tranquility, traders say Beijing needs to implement deeper structural reforms and make breakthroughs on trade talks. 'I would focus on income growth and employment, without that the consumption story cannot return,' said Sat Duhra, a portfolio manager at Janus Henderson Investors, adding that there is a limit on the impact of stimulus. 'A resolution to the trade talks will drive more positive sentiment but it will be short-lived, and that doesn't address the structural challenges facing China.' Leveraged equity positions in China have stagnated since April. Outstanding margin debt balances on mainland exchanges are hovering around 1.8 trillion yuan ($250 billion), down nearly 8% from a March high. While equity benchmarks initially rallied following a temporary US-China tariff truce, subsequent losses have pared the CSI 300's gain for the month to under 2%. Part of the reason for the listless trading can be subdued activity from the so-called 'National Team' funds after record purchases last month. The squad has been largely dormant since late April, with inflows into a group of exchange-traded funds known to be favored by the team slowing to a trickle, or even turning to outflows, according to data compiled by Bloomberg. Meanwhile, aggregate flows into all equity-focused ETFs in China have been negative for five straight weeks. While enthusiasm toward stocks has cooled, fixed-income ETFs have become all the rage. The turnover across a basket of 30 such products hit a record 90 billion yuan this month, accounting for an unprecedented 8.2% of all trading value in Shanghai and Shenzhen. The last time the ratio reached 8% was in August 2024, when stocks were still in the doldrums. These risk-adverse products have consistently ranked as the most actively-traded securities in Shanghai and Shenzhen over the past two weeks, according to Bloomberg-compiled data. A lack of clear direction has pushed some investors into more riskier corners of the market. Trading in the smallcap CSI 2000 Index accounted for more than a third of the total turnover on the mainland on Tuesday. The CSI 2000 gauge has gained nearly 9% this year through Tuesday, compared to the CSI 300's 2.4% drop. The surge in interest toward volatile smallcaps suggests a lack of sustainable themes to chase in the stock market. Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Why Apple Still Hasn't Cracked AI Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol ©2025 Bloomberg L.P. Sign in to access your portfolio
Mint
2 days ago
- Business
- Mint
Chinas yuan edges lower on dollar strength, weaker fixing
HONG KONG, - China's yuan weakened slightly against the U.S. dollar on Wednesday, as the central bank eased its fixing and the greenback held on to gains spurred by easing trade tensions and upbeat data. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.1894 per dollar, 18 pips weaker than the previous level. The midpoint rate is the level around which the yuan is allowed to trade a maximum of 2% up or down. That comes after the central bank set a slightly weaker-than-expected midpoint fixing for two days in a row, which is seen by market players as a sign to slow the currency's appreciation. The yuan is up 1.0% against the dollar this month following a de-escalation in China-U.S. trade tensions, while the greenback weakened on concerns over the U.S. fiscal outlook. The move indicates that the PBoC is phasing out its one-way CNY fixing support, said Ken Cheung, chief Asian FX strategist at Mizuho Bank. "Notably, CNH/CNY spot spread has turned negative since May 23, reflecting a modest RMB appreciation bias is building up," he added. By 03:22 GMT, the yuan was 0.04% lower at 7.1985 to the dollar after trading in a range of 7.1910 to 7.2033. The offshore yuan traded at 7.1961 per dollar, down about 0.06% in Asian trade. Based on Wednesday's official guidance, the yuan is allowed to drop as far as 7.3332. Elsewhere, the Hong Kong dollar weakened past 7.84 per dollar for the first time since September 2023. The dollar's six-currency index was 0.3% higher at 99.79, building on Tuesday's rally, as upbeat economic data in the United States and easing trade frictions lifted sentiment. Key onshore vs offshore levels: * Overnight dollar/yuan swap onshore -6.00 pips vs. offshore -6.00 * Three-month SHIBOR 1.6 % vs. 3-month CNH HIBOR 1.7 % This article was generated from an automated news agency feed without modifications to text.
Mint
2 days ago
- Business
- Mint
China Seeks to Slow Yuan's Gains After Months of Propping It Up
The dollar's extended slide has prompted China's central bank to change tack in managing its currency, as it pivots from supporting the yuan to guarding against the risk of a rapid appreciation. The People's Bank of China fixed the yuan's daily reference rate at a slightly weaker level than market forecasts on Monday and Tuesday, after setting it stronger for most of the past six months. The PBOC is also on track to pause bill sales in Hong Kong for a third month, the longest run since 2018, leaving liquidity ample and easing upward pressure on the yuan. Adding to that, state-owned banks have been spotted buying dollars in the onshore market in recent weeks as they try to slow the Chinese currency's gains, according to traders. The PBOC's recent shift is the latest example of how the dollar's descent is rippling through global financial markets, as policymakers step back from propping up their currencies and anticipate more room to ease to shore up growth. In China's case, the authorities have to walk a fine line as a sharply weaker yuan may spur outflows, while a rapidly strengthening one could hurt exports. 'China's domestic condition is not ready to take on significant yuan appreciation,' said Ju Wang, head of Greater China FX & rates strategy at BNP Paribas SA. 'We still believe the yuan will lag the basket despite the weak USD trend and de-dollarization theme.' Beijing's tariff truce with Washington has bolstered China's currency, helping it advance more than 2% versus the greenback from an 18-year low set in April. The rally has given the PBOC room to pare back its defense of the yuan. The offshore yuan slipped 0.1% to 7.1980 per dollar on Wednesday to head for a third day of declines. This came after the PBOC set the yuan fixing at 7.1894, a slightly weaker rate for a second session. The PBOC has refrained from issuing bills in Hong Kong, and Bloomberg's calculation show that maturities in the three months through May unleashed 85 billion yuan of funds into the market. That helped to keep one-month funding costs on the yuan at around 1.7%, compared with as much as 4.5% in January when the PBOC offered extra bills to squeeze yuan short sellers. The latest economic data reinforce the need for authorities to ensure that the yuan doesn't strengthen too quickly. China's exports have held up well, but persistent price deflation and weak consumption highlight the need for continued policy support. Analysts say Chinese officials are unlikely to sit on the sidelines if the yuan starts to make rapid gains, akin to the recent moves seen in the Taiwan dollar and South Korean won. 'Alongside the resurfacing USD selloff, the PBOC is likely to tread cautiously to avoid excessive yuan appreciation, which could weigh on China exports amid the tariffs rout,' said Ken Cheung, chief Asian FX strategist at Mizuho Bank. This article was generated from an automated news agency feed without modifications to text.
Business Standard
3 days ago
- Business
- Business Standard
China's benchmark slips 0.18%
Asian shares fluctuated before ending mixed on Tuesday as investors awaited new tariff updates and assessed the impact of U.S. President Donald Trump's policies on global growth. Investors also reacted to rising Covid-19 cases across Southeast Asia. The dollar drifted lower due to fiscal and trade jitters while gold eased from a two-week high and oil was little changed in Asian trade. China's Shanghai Composite index slipped 0.18 percent to 3,340.69 despite industrial firms reporting faster profit growth in April. EV maker BYD fell 2.3 percent to extend losses from the previous session after announcing steep discounts across several models. The yuan slipped against the dollar despite reports that the People's Bank of China has asked major lenders to raise the share of yuan when facilitating cross-border trade. Hong Kong's Hang Seng index ended up 0.43 percent at 23,381.99, reversing early losses ahead of upcoming China PMI data. Moody's has affirmed China's A1 sovereign credit rating with a negative outlook but flagged risks from weak consumption and trade war volatility.
The Star
3 days ago
- Business
- The Star
China's yuan slips as PBOC appears to reinforce currency stability via guidance fix
SHANGHAI: China's yuan slipped against the dollar on Tuesday, as the central bank set a slightly weaker-than-expected midpoint fixing for the second day in a row, a signal that investors interpreted as an official intention to reinforce currency stability. Most emerging market currencies strengthened to reflect the broad dollar weakness, as investors anxiously awaited fresh developments in U.S. President Donald Trump's trade policy and ongoing concerns over the U.S. fiscal outlook. However, the yuan underperformed its peers as the central bank pivoted from preventing excess losses in the Chinese currency over the past six months to slowing yuan rallies, currency traders and analysts said. "We believe policymakers are likely to still adopt a measured approach to appreciation like how they took on a measured approach when USD/RMB was trading higher previously," said Christopher Wong, FX strategist at OCBC Bank. The yuan has strengthened about 1.1% to the dollar so far this month, below gains seen in other Asian currencies, such as the Korean won or Taiwan dollar. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1876 per dollar, and 34 pips weaker than a Reuters' estimate of 7.1842. "In the near term, the PBOC may turn more cautious against yuan appreciation bias if the dollar sell-off persists," said Ken Cheung, chief Asian FX strategist at Mizuho Bank. "In this sense, the PBOC may use the yuan fixing to smooth out yuan appreciation bias amid the dollar decline, driving the yuan basket index lower to support export sector." The CFETS yuan basket index, a gauge that measures the yuan's strength against its major trading partners, eased to 95.8 on Tuesday and has lost about 5.6% so far this year. The spot yuan, however, has gained 1.6% versus the dollar. As opposed to a persistently strengthening bias in the official guidance fix since November, the weaker-than-expected fixing discouraged market participants from testing new highs in the yuan, said a trader at a Chinese bank. As of 0349 GMT, the onshore yuan was 0.05% lower at 7.1903 per dollar, while its offshore counterpart was down about 0.09% in Asian trade to 7.1840. Seasonal demand also weighed on the yuan, as many overseas-listed Chinese companies usually have higher foreign exchange needs to make dividend payments to their overseas shareholders between May and August. Separately, the market largely shrugged off April industrial profit data, which picked up pace, giving policymakers cause for optimism that recent stimulus efforts are helping to keep the economy afloat despite trade tensions with the United States. Investors will look to May manufacturing activity data due on Saturday for more clues on the health of the economy. - Reuters
