Trump considers delisting US listed Chinese firms
Markets were moderately risk-off on Friday – USDJPY down, equities down and bonds up – after headlines emerged that the US might consider imposing limits around US capital flows to Chinese companies. These limits, according to Bloomberg reports, could take the form of “delisting Chinese companies from US stock exchanges” or “limiting [US investor] exposure to the Chinese market through government pension funds”. It remains unclear whether these harsh securities laws, currently green lit by Trump for debate among the Administration, can get off the ground. Though, to effectively occlude China’s access to liquidity from US financial markets potentially serves as the most extreme retaliation to date.
Markets edgy on potentially harsher US securities laws
With China walking into National Day holidays on Oct-1, US-China trade relations have all of a sudden just got edgy again – especially when it seemed that stances were softening on both sides with the US delaying October tariffs and China issuing waivers for US soybeans. It was only last week that China’s top diplomat, Wang Yi, erred on the side of more positive language when urging both sides to “take more enthusiastic measures” and Larry Kudlow, White House economic advisor, suggested that “mood music, if you will, [was] very positive going into [October] negotiations”. Trump made clear at the UN Forum that he would not accept a bad deal in any case.
Note that as China takes leaves, Asia session sees less market liquidity and is perhaps more vulnerable to US-China headlines. USDCNH had a large intraday move on the news, +0.5%, but has since opened lower Monday morning. CSI50, also lower -1.7%, sees downside support at 13,370 (Aug-30 low) and 13,270 (Aug-29 low). USDJPY looks to firm below 108 with bearish bias retained.
China PMIs pencilled in for manufacturing contraction
To add to the China complex, two important data points are out today that give markets a further look into the state of China’s manufacturing landscape. The official China Manufacturing PMI prints at 11.00am AEST while the similar Markit’s Caixin Manufacturing PMI follows thereafter at 11.45am AEST.
Trump considers delisting US listed Chinese firms
Markets were moderately risk-off on Friday – USDJPY down, equities down and bonds up – after headlines emerged that the US might consider imposing limits around US capital flows to Chinese companies. These limits, according to Bloomberg reports, could take the form of “delisting Chinese companies from US stock exchanges” or “limiting [US investor] exposure to the Chinese market through government pension funds”. It remains unclear whether these harsh securities laws, currently green lit by Trump for debate among the Administration, can get off the ground. Though, to effectively occlude China’s access to liquidity from US financial markets potentially serves as the most extreme retaliation to date.
Markets edgy on potentially harsher US securities laws
With China walking into National Day holidays on Oct-1, US-China trade relations have all of a sudden just got edgy again – especially when it seemed that stances were softening on both sides with the US delaying October tariffs and China issuing waivers for US soybeans. It was only last week that China’s top diplomat, Wang Yi, erred on the side of more positive language when urging both sides to “take more enthusiastic measures” and Larry Kudlow, White House economic advisor, suggested that “mood music, if you will, [was] very positive going into [October] negotiations”. Trump made clear at the UN Forum that he would not accept a bad deal in any case.
Note that as China takes leaves, Asia session sees less market liquidity and is perhaps more vulnerable to US-China headlines. USDCNH had a large intraday move on the news, +0.5%, but has since opened lower Monday morning. CSI50, also lower -1.7%, sees downside support at 13,370 (Aug-30 low) and 13,270 (Aug-29 low). USDJPY looks to firm below 108 with bearish bias retained.
China PMIs pencilled in for manufacturing contraction
To add to the China complex, two important data points are out today that give markets a further look into the state of China’s manufacturing landscape. The official China Manufacturing PMI prints at 11.00am AEST while the similar Markit’s Caixin Manufacturing PMI follows thereafter at 11.45am AEST.
