China: Stocks take a big hit but not alone this time

ANALYSIS | 10/11/2018 15:03:14 GMT

After some stabilisation, Chinese stocks took a big hit overnight, falling 5% to the lowest level in more than two years. However, in contrast with the declines earlier this year, this was part of a global sell-off that included the US market. The sharp market fall was driven by the tech sector and centred on tech. The share price of China’s biggest tech company Tencent is down more than 40% from the peak in January.
The downward pressure on the CNY continued after China cut the Reserve Requirement Ratio for the third time this year. We expect the trend of a weaker CNY to continue and USD/CNY to hit 7.20 in 12 months. However, we doubt the US will label China as a currency manipulator in its report next week.
Bond yields and rates have been broadly stable lately.

Share: Analysis feed

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.