In today’s briefing:
- Will the Ban on Short Selling Stocks in Korea Extended Beyond End of June 2024?
- 5 Things We Watch – SOFR Probabilities, USDJPY, CNY Devaluation, IFO & Eurozone electricity
- HSCEI Outperformance Is Asia’s Best Kept Secret
- Chinese Speculative Activity Driving Gold to Record Highs
- Macro Overview #2: A Review of Recent Events Impacting Our Investment Themes.
- CX Daily: China’s Insurers Scale Back High-Yield Investment
- China Falls Far Behind U.S. in AI-Generated Content Funding, Investor Says
- The Weekly Market Monitor – Is that Stagflation? And What Is China’s Impossible Choice?
- BoE Throwing Cats Among Pigeons
Will the Ban on Short Selling Stocks in Korea Extended Beyond End of June 2024?
- On 6 November 2023, the Korean government announced that it will temporarily ban short selling stocks until end of June 2024.
- On 25 April 2024, the FSS unveiled for the first time its plan to build a computer system to prevent naked short selling called NSDS (Naked Short Selling Detection System).
- There is a high probability that the the temporary ban on short selling which currently lasts until end of June 2024, could be extended further to 2Q 2025.
5 Things We Watch – SOFR Probabilities, USDJPY, CNY Devaluation, IFO & Eurozone electricity
- Welcome to our weekly ‘5 Things We Watch’, where we as always zoom in on 5 of the things we look out for in global macro.
- The battleground in macro for Q2/Q3 looks to be found in Asian FX, where the USD wrecking ball has increased risk of policy action in both China and Japan, which would have significant implications for global assets.
- This week we are watching out for the following 5 topics within global macro
HSCEI Outperformance Is Asia’s Best Kept Secret
- China Enterprise Index (HSCEI) is now the top performing index in Asia on a USD basis
- HSCEI also trades at the lowest P/E multiple in the Asia
- High probability of divergence as US and Europe markets turn down
Chinese Speculative Activity Driving Gold to Record Highs
- Gold prices touched a record high in April despite headwinds due to robust demand from Chinese speculators.
- Asian Gold ETFs saw a net inflow of funds in April, while American and European Gold ETFs witnessed net outflows.
- Demand for gold continues to be driven by central banks of emerging markets like China, India, and Türkiye.
Macro Overview #2: A Review of Recent Events Impacting Our Investment Themes.
- QE or not QE – that is the question for China.
- Gold’s rise postponed by margin increases from major trading centres?
- US markets looking increasingly risky as utilities rise in absolute and relative terms.
CX Daily: China’s Insurers Scale Back High-Yield Investment
- Insurance / In Depth: China’s insurers scale back high-yield investment
- Laura M. Cha /In depth: Regulatory titan Laura Cha takes final bow
- China-EU /Sino-EU ties could be strengthened by food trade, Europe’s agriculture chief says
China Falls Far Behind U.S. in AI-Generated Content Funding, Investor Says
- Despite China’s increasing efforts to become an artificial intelligence superpower, there is still a huge funding gap with the U.S. in the realm of AI-generated content (AIGC), a major Chinese venture capital investor said.
- Chinese companies developing AIGC solutions — which use AI to produce content based on user inputs such as questions and keywords — raised a total of around $1.3 billion last year, compared with $23 billion raised by their American counterparts, Zhou Zhifeng, a partner at Qiming Venture Partners, said at an industry event Thursday.
- That $1.3 billion of capital was almost all invested in developers of foundational large language models (LLMs) in China, while foundational LLM developers bagged nearly 87% of the $23 billion in the U.S., Zhou said.
The Weekly Market Monitor – Is that Stagflation? And What Is China’s Impossible Choice?
- Lower US GDP growth and higher inflation have revealed that sentiment is turning negative due to the latter.
- China is stuck between a rock and a hard place, which makes expecting a short-term devaluation of the Chinese Yuan a bit too easy.
- Will the labor market open the door to a recession? And what’s up with gold and Bitcoin lately?
BoE Throwing Cats Among Pigeons
- Comments from BoE MPC members have roiled market pricing recently amid perceived contradictions between each other and the hawkish flow of macro data.
- Members make different risk assessments that vary the evidence required to cut. Shocks this month are insufficient to break the dovish belief in disinflationary progress.
- Further resilience would encourage MPC members to delay their dovish hopes, just as it did with the FOMC. An unlikely hasty cut risks repeating the BoE’s 2005 policy error.
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