Sea of RED (again)
- Hong Kong: Hang Seng closed down -3.07%!!!!!!!
- China CSI 300 -0.67%
- Taiwan KOSPI -0.88%
- India Nifty 50 +0.45%
- Australia ASX -0.34%
- Japan Nikkei -1.40%
- European bourses all in negative territory so far this morning
- USD -0.35%
TOP 5 STORIES OVERNIGHT
- China bank shares slump in Hong Kong after Goldman downgrades -Reuters
Chinese banking shares listed in Hong Kong tumbled on Wednesday after Goldman Sachs downgraded top lenders including Agricultural Bank of China (AgBank) in a report that deepened worries over a sector already suffering from a weak economy.
The Hang Seng Mainland Banks Index (.HSMBI) tumbled 3.6% to near four-month lows, in its worst day in eight months.
Goldman said in a report on Wednesday that it had downgraded Agbank from “Neutral” to “Sell”, while cutting Industrial and Commercial Bank of China (ICBC) and Industrial Bank (601166.SS) from “Buy” to “Sell”.
Investors are concerned about Chinese banks’ exposure to local government debt, earnings risks stemming from such debt, and diverging fortunes among individual banks, the Wall Street bank said.
The sector is already suffering from record-low margins as the government cuts interest rates to revive a flagging post-COVID recovery.
Agbank shares fell almost 3% in Hong Kong, the biggest one-day loss in eight weeks. The Hong Kong-traded shares of ICBC, China’s biggest lender, lost nearly 2%.
l U.S.’s Yellen kicks off China visit with both sides locked in confrontation-Reuters
U.S. Treasury Secretary Janet Yellen arrived in the Chinese capital on Thursday, beginning a four-day visit expected to focus on easing ties between the world’s two largest economies, despite low expectations on both sides.
Yellen received a low-key welcome from a Chinese finance ministry official and the U.S. envoy to China, Nicholas Burns, as she stepped off a government aircraft just after a rainstorm brought some relief to an otherwise sweltering Beijing.
“I wouldn’t regard it as Janet Yellen is not welcome, but China cannot just swallow all the poison pills and continue to show a smile,” said Wang Huiyao, the president of a thinktank, the Center for China and Globalisation.
Yellen will emphasise the need to work with Beijing on climate change, pandemic preparedness and debt distress, a senior U.S. Treasury official said previously.
She will also tell her Chinese counterparts that Washington is not seeking to decouple the two economies, while reserving the right to protect human rights and U.S. national security interests through targeted actions, the official added.
Notable: Not a warm welcome. I am watching this trip carefully, I do not think she is there to discuss what the official readout says.
- German industrial orders up but situation still critical, say analysts -Reuters
German industrial orders rose significantly more than expected in May due to large-scale orders of ships, spacecraft and military vehicles, but analysts said that beyond those exceptional purchases the sector remains under serious pressure.
Incoming orders rose by 6.4% on the previous month on a seasonally and calendar adjusted basis, the federal statistics office said on Thursday. A Reuters poll of analysts had pointed to a 1.2% increase.
There was a 137.1% increase in the manufacture of other transport equipment, which includes ships, railway rolling stock, air and spacecraft, as well as military vehicles.
The sharp increase in this sector, driving up the main index, was due to large-scale orders, the statistics office said.
If this highly volatile component is factored out, the increase in the main figure is only 2.4%, instead of 6.4%, Commerzbank’s senior economist Ralph Solveen said.
Looks like war is saving German manufacturing for now
- Chinese rush to buy Hong Kong insurance, dollars as confidence cracks, yuan weakens-Reuters
Chinese investors are rushing offshore to make dollar deposits and buy Hong Kong insurance in a signal domestic confidence is languishing and that the ailing yuan faces more pressure.
The outflows highlight deep-seated concern about the state of China’s economy as its much-awaited pandemic recovery stalls. Consumer spending is flagging, the property market and stock markets are in the doldrums and cash is piling up in savings.
Chinese authorities have already stepped up efforts in the last few weeks to shore up the yuan, with state banks selling dollars and the central bank warning it would guard against the risks of large exchange rate movements.
Hao Hong, chief economist at GROW Investment Group, notes the outflows also coincide with exporters’ reluctance to repatriate dollar proceeds – another weight on the currency and sign of low confidence in the economy.
The yuan’s real exchange rate , he points out, is below the nadir seen during China’s 2015-16 stock market crash and capital flight.
The gap between two-year U.S. and Chinese government bond yields is its widest in 16 years, in favour of the U.S., and global stocks are going up while China’s are going sideways.
- China is losing control of their currency.
- This bit may be why Yellen is really there : “The gap between two-year U.S. and Chinese government bond yields is its widest in 16 years, in favour of the U.S., and global stocks are going up while China’s are going sideways.”
- OPEC OIL Seminar Quotes today
Stiell of UN ” We need inclusive conversations of all parties including the fossil fuels industry “
Petronas CEO Taufik ” We are not climate deniers but energy transition can not happen without energy security “
Bp CEO Looney ” We have great options to invest in the green energy options but we also need to keep the lifeblood of the current energy sources O&G “
Excellency Ibrahim ” Africa’s dependence on the U.S and Europe ( financing/ expertise/ Technology) can not continue, but we can not play the victim “
Angola’s energy minister says that an energy transition cannot be imposed on any country. In Africa there are 600 million living in poverty and an energy transition can’t be imposed on them
