Saxo Capital Markets uses cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy.
Okay
PrivateInstitutional
  • Search
  • Support
  • Login
General.Accessibility.Close

Quick Links

Buying in times of Uncertainty

Equities

Greater China Sales Traders

Summary:  Market seemed to have resume appetite in both A-shares and Hong Kong listed stocks alike when discount valuations give way to investors for bargain purchase. IPO market on the other hand extended its muted tone from July on the backdrop of escalating political tension in the city, with Alibaba giving a second thought of the timing of its Hong Kong listing.

Stock Connect and HK IPOs

Northbound Trading

  • Foreign traders bought a total of 13.2 Billion RMB (1.84 Billion USD) of China A-shares through the Northbound tranche via Shanghai and Shenzhen Stock Connect in August, representing a 10% jump of inflow from 12.0 Billion RMB in July as escalating trade tension between US and China weighed on sentiment.
  • Average daily turnover of Northbound stock connect aggregating both buy and sell flow jumped to 39.5 Billion RMB in the month, representing a 24% rise from July’s 31.9 Billion RMB.
  • Northbound flows accounted only 4.4% of China’s total turnover in the month.
  • China’s weakening cyclical economic outlook, structural challenges and policy responses remain the main theme overhanging the nation’s banks’ credit fundamentals.
  • Chinese Yuan has fallen substantially and broke through the long discussed 7-per-dollar support level that held for years after a series of dramatic escalation of trade war fuelling further concern on the apparently slowing global growth. This move has once again brought up the discussion of capital outflows and the sufficiency of foreign reserves underpinning the support for China’s banking system.
  • PBOC also rolled out the new borrowing rate benchmark in the form of Loan Prime Rate on 20-Aug, with an aim to ease borrowing cost and facilitate more transparent pricing and a stronger indicator on the broad bank loan market. This move will essentially dent the net interest margin for banks in exchange for better support to corporate borrowers and improve funding conditions around the domestic equity market.
Share

Related Articles

EQUITIES

Q2 earnings were worse than expected but investors are pricing a ‘new world’

Earnings were bad in Q2 and worse than expected six weeks ago although the provided outlooks have improved and bolstered forward earnings expectations. It is clear from dividend futures that the market expect companies to rebound in terms of earnings but lower the payout ratio to either repay debt or invest in growth. Either way, our view is that investors have overlooked bad macro and earnings as they are pricing in a 'new world' of lower yields for longer but still high growth in certain areas of the economy which will drive bond proxy pricing in equities and accelerate equity concentration.

EQUITIES

How do changes in US real yields impact asset classes?

Falling US real yields have historically been coincident with rising gold, ringing EURUSD and falling USDJPY. These relationships are not that confusing but over time equities do have a positive relationship with real yields and as such equities should not behave as it does right now under rapidly falling real yields as they reflect falling expectations for growth. When we analyse the entire spectrum over change in US real yields we observe that equities rise rapidly under both significantly falling and rising real yields.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Democratising trading
and investment for
more than 25 years.

Hong Kong S.A.R

Saxo Capital Markets HK Limited
Rooms 2001-02, 20/F York House
The Landmark
15 Queen's Road Central
Hong Kong

Contact Saxo

Products & pricing

Platforms & services

General

Losses can exceed deposits on margin products. Please ensure you understand the risks.

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract) and Type 3 Regulated Activity (Leveraged foreign exchange trading) licenses (CE No. AVD061). Registered address: Rooms 2001-02, 20/F York House, The Landmark, 15 Queen's Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.