FXStreet (Barcelona) – The Brown Brothers Harriman Team comments on the Chinese equity market performance, PBoC’s and CSRC’s recent action, and the slump in recent economic data.
Key Quotes
“Some $2.8 tln of value was erased from Chinese equity markets in the last three weeks. In terms of capitalization, Chinese equities now account for 10% of global share, down from nearly 14% at the peak of the rally in mid-June (according to Bloomberg calculations).”
“After reserve requirement and interest cuts, the PBoC injected funds via reverse repo earlier this week, yet none of it stemmed the unwind. The latest front was the announcement that the regulating agency (CSRC) is looking to punish “manipulators.” But confidence is proving hard to restore now that the meaning of two-way has become clear.”
“The slowdown in the HSBC composite and services PMI seen today (at 56.6 and 51.8, respectively) didn’t tell us anything we don’t know. We doubt it was a factor in the overnight moves in China, but it may have contributed to the fall in the Australian dollar.”
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