The atmosphere surrounding Chinese assets is getting gloomier, extending beyond the realm of battered stocks. Investors are now expressing skepticism not just about stocks but also anticipating underperformance in the yuan and government bonds.
Ken Cheung, the chief Asian currency strategist at Mizuho Bank Ltd. in Hong Kong, reflects this sentiment, stating, “We expect the yuan to remain under pressure in the near term given the bearish expectations for China’s growth this year.”
Interestingly, as China falls out of favor, traders are finding reasons to be more positive about other emerging market (EM) peers. They see potential benefits for higher-yielding markets from the anticipated rate cuts by the Fed. Additionally, the potential inclusion of South Korea and India in major global bond indexes is expected to give their assets an added boost.
This shift in perception suggests a challenging period for Chinese assets, with broader implications for global markets and investor sentiment.
🇨🇳Gloom Over China Assets Is Spreading Beyond Battered Stocks
Skepticism over Chinese assets is spreading beyond stocks, with investors expecting the yuan and government bonds to underperform
“We expect the yuan to remain under pressure in the near term given the bearish… pic.twitter.com/6wRKw5LV3z
— Tracy (𝒞𝒽𝒾 ) (@chigrl) January 22, 2024