Traders Hold Breath as China Markets to Reopen After Holiday
China’s financial markets are set to open for the first time in a week on Friday, with investors bracing for volatility from a surprise default in the property sector coupled with the global energy shortage.To get more China finance news, you can visit shine news official website.
The Golden Week holiday offered a rare respite from a months-long regulatory onslaught that’s sent shock waves through the world’s financial markets. As trading resumes focus will be on where Beijing will strike next and the impact of Fantasia Holdings Group Co.’s dollar-bond default this week, the first in the industry since China Evergrande Group sank deeper into crisis.
There will be intense interest in how the People’s Bank of China can keep liquidity ample given the wall of short-term debt due this month. About 340 billion yuan ($53 billion) of 14-day reverse repurchase agreements will mature on Friday when onshore markets reopen.
Chinese stocks listed in Hong Kong are about 0.2% lower since onshore markets last traded. On Wednesday they dropped to levels not seen since China’s equity bubble burst in 2016, before rebounding on Thursday. In a positive note overnight, Chinese technology stocks listed in the U.S. gained for a third straight day amid improved risk appetite. The offshore yuan was little changed.
Sentiment among Chinese investors “has recently recovered to a neutral level, but the trend is decidedly downward and the upside is capped by recent domestic default stories,” said Olivier d’Assier, head of APAC applied research at Qontigo. “The main issues affecting sentiment have been purely domestic so far, but on the geopolitical front, the U.S.-China trade talks have yet to take place and this issue remains unresolved.”
Relations with the U.S. are under the microscope after news that President Joe Biden plans to meet Xi Jinping virtually by year end. U.S. Trade Representative Katherine Tai is also set to speak to Vice Premier Liu He in coming days, with the two countries still at loggerheads over China’s commitments in the January 2020 trade deal.