In today’s briefing:
- Ban on Short Selling Stocks in Korea Extended Until March 2025
- China’s Economy Under a Hypothetical Case of Political Liberalization
- CX Daily: Chinese Customers Sold on ‘Elixir of Youth’ Despite Expert Warnings
- Fed Snap (Jun 12 Meeting): Current & Future Takeaways
- China’s Long Property Bubble and Indebted Developers
- Quant Signals: USDMXN
- Macro Regime Indicator: Up, Up, Up still!
- China: Five Headwinds To Long Term Growth
- Nat Gas Prices to Fire Up on Rising Demand, Weak Production, and Shaky Geopolitics
- Australia Unemployment Rate 4.0% (consensus 4.0%) in May-24
Ban on Short Selling Stocks in Korea Extended Until March 2025
- On 13 June, the Korean government announced that it will extend a ban on short selling stocks in Korea until end of March 2025.
- For now, the government has not given a 100% go-ahead on the end of the ban on short selling stocks starting 1 April 2025.
- However, in our view, the government is likely to allow short selling stocks in Korea once again, sometime in 2Q 2025.
China’s Economy Under a Hypothetical Case of Political Liberalization
- Rumor has it that President Xi is swaying towards political liberalization
- Facts are that there are too many local representatives with regional differences rejecting Xi’s plan
- Economies will thrive and the current chips shortage maybe overcome under liberalization
CX Daily: Chinese Customers Sold on ‘Elixir of Youth’ Despite Expert Warnings
- In Depth: Chinese customers sold on ‘elixir of youth’ despite expert warnings
- Suspect arrested in stabbing of four American college teachers in China
- Executive at ICBC’s Beijing branch investigated for suspected graft
Fed Snap (Jun 12 Meeting): Current & Future Takeaways
- Since the FOMC decision to remain on-hold in June was unsurprising, the emphasis was on the accompanying statement, dotplot and presser
- The post-meeting statement tilted somewhat dovishly, but the 2024 median dot skewed more hawkishly
- While a July rate cut remains remote, the odds of a September or November pivot have increased following the June FOMC
China’s Long Property Bubble and Indebted Developers
- China policymakers’ deleveraging pressures on property developers have been supplemented by recent common prosperity measures to ensure that “housing is for living and not for speculation”.
- This has raised concerns of a major property developer bankruptcy and questions of whether China’s highly valued property market could finally see a housing bust.
- Chinese authorities have huge economic and political incentives to ensure that deleveraging pressure is followed by support as property developers deleverage.
Quant Signals: USDMXN
- The case for a stronger MXNMXN sold off massively following the Mexican election last week but we still view the MXN as a clear-cut ‘trade balance’ play.
- As long as the trade ties between China and the US increasingly necessitate a ‘value-add middleman,’ Mexico remains in an advantageous position, regardless of whether the president is Sheinbaum or Obrador.
- Our PCA model reveals that USDMXN is trading very rich compared to macro factors.
Macro Regime Indicator: Up, Up, Up still!
- In May we concluded that: “In May, our models hint of an “Up,Up,Up” environment in inflation, growth and liquidity, which is a decently positive indicator for risk assets, but also for broader reflationary trades returning through the month and into June.” The above conclusion has held true to a large extent and we went against the prevailing consensus driven by the “slowdonistas” when needed during the latter parts of April.
- For June/July, we see an increasing liquidity trend from right about now, while the growth- and inflation cycle cyclically heats up still, while some lagged effects pull in the opposite direction.
- From a market perspective, the overwhelming conclusion is that we will continue in an up, up, up macro regime referring to the liquidity cycle, growth cycle and cyclical price/inflation cycle.
China: Five Headwinds To Long Term Growth
- The catch-up productivity argument would point towards 4-5% growth in China in the 2025- 2030 period.
- We are concerned that the residential property downturn and rewiring of global supply chains will be persistent headwinds for China GDP growth in the coming years.
- The switch to state socialism under President Xi means China is unlikely to have as much productivity pick- up as in Japan and South Korea in their earlier development stage.
Nat Gas Prices to Fire Up on Rising Demand, Weak Production, and Shaky Geopolitics
- The EIA expects US natural gas production to fall by 1% in 2024 and lifted LNG price forecast for Henry Hub benchmark by 13% for the year.
- OPEC’s 2024 global oil demand growth forecast unchanged at 2.25m bpd. But IEA lowered its projection to 960k bpd from 1.1m bpd.
- Russia, Iraq, & Kazakhstan continued to oversupply despite lowering production MoM in May.
Australia Unemployment Rate 4.0% (consensus 4.0%) in May-24
- Australia’s unemployment rate decreased to 4.0% in May 2024, with an addition of 39,700 jobs, demonstrating the resilience of the labour market.
- Economic indicators show a split in recovery, with a strong service sector performance (PMI Services 52.5).
- The robust service sector is offset by vulnerabilities in the manufacturing sector (PMI Manufacturing 49.7) and slow growth in consumer spending (retail sales 0.1% m-o-m in April 2024).
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
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