Marvin Dieckmann’s Post

We are cautious on chasing the post-stimulus China equity market bounce. Taking a step back, although Chinese EPS growth has troughed as we expected, recent data points suggest that the recovery is likely to be slow as the headwinds from sluggish consumer spending, rising tariff risk, and deflationary forces will likely more than offset stimulus tailwinds. Indeed, consensus expectations for China's 2025 EPS growth have started to fall and the market's EPS revisions ratio has turned sharply lower following the recent reporting season, in contrast to resilience elsewhere in EMs. Clients can read our full China equities outlook note here --> https://lnkd.in/e7RHuxqY

Since it was opened up and reformed in the late 1970s, China’s economy has grown at an average rate of 9% a year. Not this year. Facing strong disinflationary pressures, a severe property downturn and frail consumer confidence, China risks missing its own annual growth target of around 5%. So, as the week began, markets reacted enthusiastically to the People’s Bank of China unveiling a major package of aggressive measures designed to stimulate the economy. https://lnkd.in/eaM2Mx8g

During 1Q24, equities in China weighed on #emergingmarkets performance, due to concerns about the property sector🏗 and investor disappointment in the size and pace of government support.   However, global #equities with material exposure to China’s economy have diverged sharply 🔀 from the MSCI China Index.   💡In our view, the performance differential highlights the country risk that still looms for some investors, despite upward earnings growth revisions and upside surprises in industrial production in #China.   Read more about our thoughts on China, U.S. and European markets in April’s Global Market Snapshot: https://lnkd.in/gSh35H7w

Most recently, we wrote on #China, #Risk, durable #Goods and the #Currency war. Read ⬇️ 🌏 China's Economic Confidence Boost As China approaches its 75th anniversary, authorities are working hard to revitalize confidence. The People's Bank of China (PBOC) has announced a comprehensive package addressing policy rates, liquidity, the property sector, and the stock market, with unexpected guidance on future policies. However, to truly uplift domestic confidence, further fiscal spending is necessary, as hinted at in this week's Politburo meeting. Despite aiming for an official growth target of "around 5%" for this year, downside risks remain, while 2025 could see an upside to our forecast of +4.3%. 📊 Quarterly Country and Sector Risk Changes: Normalization Complete  We've upgraded 14 countries, reflecting the ongoing recovery in economic outlooks. Yet, the journey ahead is uneven due to protectionist policies and geopolitical tensions. In sectoral analysis, nine sectors have improved while five have declined. Downgrades were seen across all regions, particularly in the automotive sector in Germany and Switzerland, and the retail sector in China due to weak consumer outlooks. 📈 Durable Goods: Poised for a Rebound in 2025  Following a slowdown in 2022 and 2023, durable goods sales are projected to remain sluggish in 2024 but are set for a robust recovery in 2025. Key factors include decreasing financing costs, a shift from expensive services to goods, replacement cycles from 2021 purchases, technological innovation, and easing supply-chain disruptions. 💱 The Great Loosening Cycle: Balancing FX, Inflation, and Growth  Central banks are navigating a complex landscape. The Fed's significant cut is a positive move for the global FX market, yet challenges remain. We categorize countries into four clusters based on their priorities: Emerging Europe, Chile, and Colombia: Focus on boosting growth while managing inflation. Advanced economies in Europe, China, and Thailand: Growth with fewer inflation concerns. Most of Asia, Latin America, South Africa, and Norway: Slower easing due to weak exchange rates and financial stability. Large African economies, Türkiye, and Argentina: Restoring exchange rate confidence and reducing inflation. Switzerland and Japan may need interventions to manage appreciation pressures. #Ludonomics #AllianzTrade #Allianz https://lnkd.in/eby-DUBQ

China may have to brace for a new wave of bond defaults China’s state-directed economy may be creating the conditions for a new wave of bond defaults that could come as soon as next year, according to an S&P Global Ratings report. It would be the third round of corporate defaults in about a decade, the ratings agency pointed out. Real estate led the latest wave of defaults between 2020 and 2024, according to S&P. Prior to that, their analysis showed that industrials and commodity firms led defaults in 2015 to 2019. Much of household wealth in China is in real estate, rather than other financial assets such as stocks. Large levels of public, private and hidden debt in China have long raised concerns about the potential for systemic financial risks. https://lnkd.in/g6zmMbUa

Recently, Asian shares slipped after China released its purchasing manager index data for August. Follow the news here! Visit Here - https://lnkd.in/g5DsEgXv #tradeflock #tradeflockasia #asia #asianmarkets #chinamieville #marketupdate #stockmarketnews #asianshares #economicdata #chinaeconomy #markettrends #globalmarkets #stockmarket #economicindicators #pmidata #marketmovers #investmentnews #marketwatch #economicupdate #stockmarketupdate #chinamarket #globaleconomy #marketinsights #financialnews #chinastockmarket

15 amazing facts about the FTSE China A50 Index you probably didn't know: Top 50 Companies: The FTSE China A50 Index comprises the 50 largest A-share companies listed on the Shanghai and Shenzhen Stock Exchanges. Market Capitalization: Companies are selected based on their market capitalization, making it a benchmark for equity investment in Mainland China. Diverse Sectors: The index includes companies from various sectors such as banking, insurance, consumer goods, industrials, and financial services. Banking Dominance: The banking sector holds the largest weight in the index, averaging around 44%. Quarterly Review: The index is reviewed quarterly by an independent committee to ensure it remains representative of the Chinese market. High Liquidity: The China A50 is known for its high liquidity and low spreads, making it popular among traders. Global Economic Indicator: The index is often used as an indicator of the overall health of the Chinese economy. Ping An Insurance: One of the notable companies in the index is Ping An Insurance, a major player in the life insurance sector. China Merchants Bank: Another significant company in the index is China Merchants Bank, which is a key player in the banking sector. Industrial Giants: The index includes industrial giants like Sany Heavy Equipment and Great Wall Motor. Consumer Goods: The consumer goods sector, which includes companies like BYD and Haier, represents about 12% of the index. Financial Services: The financial services sector, including companies like CITIC Securities, holds an 11% share in the index. Economic Growth: The growth of the China A50 index reflects China’s rapid economic development over the past few decades. Currency Impact: The value of the index can be influenced by the strength or weakness of the Chinese yuan (CNY). Trade Relations: Changes in China’s trade relationships, especially with major partners like the US, can significantly impact the index. #markets #chinaA50 #trading #trade #stocks #indices

🌏 In our Q2 Asia Corporates Newsletter, our Asia Pacific research team delves into the macro backdrop currently setting the scene for corporates in the region. 💲 The Federal Reserve is looking set for a delayed, potentially more drawn out and eventually shallower interest rate cycle than in the past. This position puts central banks in Asia in a bind, as higher for longer core rates and a stronger US dollar make it harder for them to respond to their domestic imperatives of growth and inflation. 🛢️ Upside risks to oil are again potentially upsetting the balance of both trade and inflation in the region. Also, while elections in Asia are mostly done, the political calendar is set to heat up in the second half of the year in the lead-up to the US presidential election. This all points to the next few months being likely challenging in Asia. 🚗 However, there are also key opportunities like the Goldilocks-ish macro environment in India, investments being made in ASEAN to move up the semiconductor value chain and Thailand’s efforts to become a regional export hub for Electric Vehicles. For more insights, registered clients can read our full Q2 Asia Corporate Newsletter here: https://lnkd.in/emn6xKCs #dbresearch #electricvehicles #Asia #AsiaPacific Deutsche Bank Sameer Goel Tim Baker Michael Hsueh Liam Fitzpatrick Perry Kojodjojo Bryant Xu Joey Chung

Big move by China! It is boosting the economy!! China's markets soared today as Hong Kong and Mainland China indices drove the overall Asian region higher. Chinese market hit its highest level in over 3 weeks while Hong Kong reclaimed the 18,800 level after almost 5 months!!! But why? Due to stimulus plans. Recent economic data from China painted a bleak picture of the Chinese economy as Chinese officials trimmed the 14-day repurchase rate yesterday and announced a meeting of the top 3 financial regulators to discuss the growing calls for further stimulus. According to reports, authorities announced the provision of liquidity support of 800 billion yuan ($114 billion) for stocks while allowing brokerages and funds to access the PBOC’s funding to buy stocks. Moreover, reserve requirements for banks would be trimmed by 0.5%, down payment for homes would be reduced from 25% to 15%, and mortgage rates would be cut by 0.5%. All these moves were in a bid to support the country’s beleaguered stock market and real estate sector while boosting consumer demand. When reporting, the Hang Seng was trading at around 18,845.37, up 3.28%. Follow ProCapitas for more financial insights. #china #chinese #economy #growth #asia #finance #financialinsights

Is China turning the corner? Goldman Sachs and Morgan Stanley have been the latest to revise upward China's growth outlook in 2024, to 5% and 4.8% respectively. The reasons? Factory activity and exports accelerated in 1Q24. More on this on 12Apr24 with exports number for Mar24 👀 Now, property sector and consumer demand remain weak. Despite 10-year rates at 2.3%, consumer prices remain depressed. In trading, after an uptick early Feb24, equities have been range-bound over the past month. #china #exports #equities #fixedincome