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Market Overview

Global Overview July 13, 2016

China

At this point, we believe that China has dodged the big bullet. Hard landing is no longer in the vocabulary of most economists and forecasters. Detractors seem to have to resort to rehashing issues such as high leverage and high indebtedness to justify their bearish case. Yet there is no sign of impending doom. As a rather closed economy, the central government in Beijing has managed to keep rather tight control over China’s numerous problems. The recent fear about flight capital also seems to have abated. At the end of the day, foreign currency reserves still stand over $3.2 trillion. As new issues such as Brexit have grabbed the headlines, China seems to have faded to the back page. As an example, the recent decline of the yuan against the basket has not gathered much attention compared to what happened almost exactly a year ago. In the meantime, calm seems to have returned to the Chinese stock market as the economy stabilizes.
Wednesday, July 13, 2016/Author: John Hsu/Number of views (612)/Comments (0)/

Overview April 14, 2016

Since last summer, global economies and financial markets have been embroiled in a continuous series of turmoil. The key element has been attributed to uncertainties about the Chinese economy and the subsequent collapse of the Chinese stock markets initially back in July and the second wave literally at the beginning of this year.
Thursday, April 14, 2016/Author: John Hsu/Number of views (641)/Comments (0)/

Overview January 7, 2016

The 2016 global stock market meltdown is easily attributable to China. After all, China not only led the way timewise but also in terms of magnitude. Ostensibly, the China debacle was triggered by the widening spread between the onshore and offshore yuan and the ultimate move by the PBOC in changing the peg of the yuan to the dollar. In many respects, the further devaluation of the yuan has been anticipated since last August. Stock market sentiment has been further pressured by the anticipated lifting of the ban on trading by large shareholders. It was scheduled to expire towards the end of this week. Sentiment was not helped by newly formulated circuit breakers.

Friday, January 8, 2016/Author: John Hsu/Number of views (712)/Comments (0)/

Global Overview October 12, 2015

Summer has passed and so has the idea that the financial world was stepping off a precipice.

China, one of the main excuses for the doomsday scenario, seems to have stabilized. Actually China is going through a once in a lifetime transition, moving from a 19th/20th century manufacturing economy to a 21st century service/consumer driven one. Current statistics suggest that it is roughly half accomplished. So this is a classic case of the glass being half full or half empty. Manufacturing is slowing thereby giving voice to those who have embraced the thesis that China’s economy is seriously slowing down. Yet if one would bother to review China’s focus on service and consumer, one would likely discover that these sectors are growing double digit.

Thursday, October 22, 2015/Author: John Hsu/Number of views (672)/Comments (0)/

Current Overview August 12, 2015

On August 11th the People’s Bank of China (PBOC) surprised the world in devaluing the Chinese currency, the renminbi, by 1.9%. In addition, the central bank also announced a partial liberalization of its exchange rate mechanism. Purportedly this is a one-off action and at this juncture we have no reason to doubt the PBOC’s intentions.

Wednesday, August 12, 2015/Author: John Hsu/Number of views (640)/Comments (0)/
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