Daily Brief Macro: CX Daily: China Relaxes Restrictions on Overseas Loans so Developers Can Repay Dollar Bonds and more

In today’s briefing:

CX Daily: China Relaxes Restrictions on Overseas Loans so Developers Can Repay Dollar Bonds
Korean Equity Indices Rebalances – A Year in Review (2022)
The BIS ”Hidden USD Debt” Story Explained

CX Daily: China Relaxes Restrictions on Overseas Loans so Developers Can Repay Dollar Bonds

China relaxes restrictions on overseas loans so developers can repay dollar bonds.
Beijing scraps Covid test requirement for public places.
Former Caixin deputy editor-in-chief Zhang Jin dies at 56.

In this insight, we discuss the price performance actions of 31 stocks that have been rebalanced in both the KOSPI 200 and MSCI Korea Index in 2022.
Of these 31 stocks, 18 of them are the KOSPI 200 index changes and 13 of them are for the MSCI Korea Index changes.
Some alpha generating performances continue in terms of adding stocks to be included in the KOSPI 200 and MSCI Korea index rebalances and reducing stocks that could be excluded.

Our monetary and credit system is USD-centric: the lion share of international debt, trade invoices, asset classes and FX volume is settled or denomnated in US Dollars.
Funnily enough though, direct access to $ liquidity is only available to entities located in the United States but in a credit-based system the rest of the world also has an incentive to leverage in US Dollars to boost or enhance their global business models.
That means European banks, Brazilian corporates or Japanese insurance companies which want to do global business will most likely get exposure to $-denominated assets and liabilities ($ debt) despite being domiciled outside the United States.

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