Chinese yuan hits seven-month lows as equity outflows signal lack of faith in domestic markets

From Asia Financial: 2024-06-21 05:48:37

The Chinese yuan hit seven-month lows this week as equity outflows totaled $4.5 billion from foreign investors and domestic investors poured nearly four times that into Hong Kong, signaling a lack of faith in domestic markets. Shanghai stocks have slipped 6% since mid-May, with analysts speculating on the People’s Bank of China’s future easing measures. Meanwhile, yuan deposits in Hong Kong have reached record levels, driven by mainland investors seeking higher returns offshore due to low yields at home and expectations of further easing measures. This influx, coupled with upcoming US rate cuts, is expected to boost asset prices in Hong Kong.

Analysts point to a volatile market sentiment, with doubts over China’s macro data and sluggish policy responses fueling investor caution. Despite a rocky period, investors remain cautiously optimistic about the gradual nature of China’s easing measures following the approaching July plenum of the Communist Party. The yuan, currently down 2.2% against the dollar this year, is being closely monitored amidst speculations of controlled depreciation. With the US dollar trading at 7.261 yuan, market watchers are bracing for potential impacts of global monetary policies.



Read more at Asia Financial: Outflows Pressure Sees Chinese Yuan Slip to Seven Month Lows