Get the best daily market and macroeconomic commentary anywhere for less than $7 per month.
Already have an account? log in
Xi Rescues Chinese Stocks, Triggers Astounding Rally
Beijing finally reached the pain threshold.
Following a series of dramatic sessions during which Hong Kong shares capped a rolling bear market with an existential spiral, China's top policymakers pledged to restore stability in a series of statements that triggered a monumental rally.
Xinhua described a meeting of the State Council's Financial Stability and Development Committee, chaired by Vice Premier Liu He. China directly addressed the slide in Hong Kong shares, and attempted to reassure
There may be some strategy here. China is playing whack-a-mole with monsters right now (Covid, crumbling markets, crazy Putin, crazy US, commodities mess, etc). Domestic market chaos tied to policy is the one monster problem Xi can actually solve, or at least sideline, now. Which will help provide some freedom to navigate while figuring out how much relief he can provide Russia under the constraints of the other monsters).
On a related note, Xi is facing significant internal debate about whether his Russia policy is well-founded, given Russia’s performance in Ukraine, and one interviewee pointed out that if Putin fails, then Xi would look that much worse for pushing this partnership. Maybe. But if Putin is removed from power, then two things will be true: any successor is unlikely to be his equal, and that successor will have a vast set of problems on his plate from the get-go. That would bode well for China’s ability to control the partnership rather than end it. Despite the current chaos, Russia’s mineral wealth isn’t going anywhere and China is still better off with Russia as partner against the US rather than as an adversary to the north (minding the historical antipathies of these two neighbors).
Good points there Uptowner. But a different read may be that other Politboro members may have stepped in and forced Xi’s hand. Perhaps they finally had enough of the damage from Xi’s “Common Prosperity” moves, Covid strategies and foreign policy blunders.
Not an all-clear, however. Weakened despots can act irrationally. And the successors may be even worse.
This is a move of the big China tech names, not broader Chinese markets, e.g. compare BABA to 939-HKG. After this monster squeeze is done, the rectification of platform companies will continue. Covid will still spread and/or force lockdowns. Global demand will continue to slow. US audit requirements are hardly likely to be eased.
yes, my preferred explanation is Xi trying to smooth off China’s tacit support for Russia at present with domestic economic support and relief… would love to be wrong on this…
Well, glad I didn’t capitulate on my China tech shares. But not sure I want to add. Confidence isn’t totally restored by a long shot.
If Xi starts using the PPT Playbook Americans benefit from, it won’t be long before Sleepy Val joins the game. A untied world of economic fantasy played at casinos from east to west, dovetailing together a new world order of mutual greed and successful risk free, carefree wonderment. Ding dong the yuan is dead and hooray for Hollywood, let the good times role.
The Xi put had a much lower strike than any of Powell’s puts thus far.