Yuan Worries/Financial Stress Points/Equities Unloved/Property Anger/Trade War & IPR

Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Macroeconomics

<p>The Chinese stock market continues to sell off, and is along with the Philippine bourse the worst performing in Asia this year. Investors are nervous.  Each week the US trade war on China escalates further and now the PBOC has cut reserve requirements again. We see few signs of the domestic economy losing momentum or Chinese policy makers panicking though. We are still overweight Chinese equities. Our advice to value investors with duration is to steer away from export cyclicals to domestic stocks.</p>

The Chinese stock market continues to sell off, and is along with the Philippine bourse the worst performing in Asia this year. Investors are nervous.  Each week the US trade war on China escalates further and now the PBOC has cut reserve requirements again. We see few signs of the domestic economy losing momentum or Chinese policy makers panicking though. We are still overweight Chinese equities. Our advice to value investors with duration is to steer away from export cyclicals to domestic stocks.

MSCI AC Asia ex Japan Index (MXASJ INDEX)

China RRR Cut - Time To Get Worried?