Risk sentiment firmed Friday, or at least in Asia, after the South China Morning Post “clarified” that Beijing hasn’t, in fact, imposed a moratorium on new online game approvals.
News of the purported freeze sent Hong Kong tech stocks tumbling anew on Thursday. SCMP‘s pseudo-retraction (the article now says Chinese regulators have “temporarily slowed” approvals) helped city shares close out the week with a strong session. The Hang Seng rose nearly 2%, while the tech index jumped almost 3%.
The Shanghai Composite, meanwhile, touched the highest since August of 2015 (figure below), when Beijing was busy cleaning up the collapse of a margin-fueled equity bubble and stumbling its way through a haphazard, overnight devaluation of the yuan.
Speaking of the currency, it’s the strongest in nearly three months. The yuan — which Goldman reckons will leapfrog the yen and the pound to become the world’s third-largest reserve currency by 2030 — benefited Friday from news of a 90-minute phone call between Xi Jinping and Joe Biden.
It was the first chat between the two (or at least that we know about) since February. The White House is reportedly unsatisfied with the stalemate between the world’s two superpowers, and now prefers occasional direct talks between the two heads of state.
“The two leaders had a broad, strategic discussion in which they discussed areas where our interests converge, and areas where our interests, values, and perspectives diverge,” the White House said, adding that,
They agreed to engage on both sets of issues openly and straightforwardly. This discussion, as President Biden made clear, was part of the United States’ ongoing effort to responsibly manage the competition between the United States and the PRC. President Biden underscored the United States’ enduring interest in peace, stability, and prosperity in the Indo-Pacific and the world and the two leaders discussed the responsibility of both nations to ensure competition does not veer into conflict.
Beijing said Xi expressed to Biden the desirability of maintaining regular communications and suggested the bilateral relationship “should get back on the right track.” That was according to CCTV’s account of the call.
There were no specific asks on either side and some points of contention are simply intractable. But for market participants, the call was an excuse for measured optimism. “The talk should help improve risk sentiment in the short-term,” one economist at Commerzbank told Bloomberg.
Apparently, Xi told Biden that when it comes to restoring cordial relations, it’s not a “multiple choice question.” Rather, it’s “mandatory.”
I use to read the SCMP but it was so full of propaganda I stopped and that was before China retook HK. How anyone can invest in a country where you can’t believe anything you read beats me.
Hell, I don’t believe much of what I read here either.
We had a president whom couldn’t be believed and Fox, the propaganda arm of his party, who cannot be believed either. yet, people are still investing here!
I had exactly the same experience with the SCMP before the CCP retook HK. It was a sad day, indeed. The Chinese, unfortunately, give not a damn for unbiased reporting.
My pleasure for publishing accuracy and integrity is limited to Reuters and the Associated Press. Bias has always been present to varying degrees across the publishing spectrum. But today, unfortunately, only the cream of the crop publishes the least biased reporting. And even Bloomberg, which is better than most, expresses some bias in their reporting.