1) Any worry about a Jan16 repeat in Jan17? Rate hike and dots higher from Fed?
Ans: Expected no repeat of Jan 2016 as momentum and valuation different ;Fed 's action mostly priced in.
2) What is the view on the insurers. Will they get hammered again for investing? It feels like it affects their ability to invest in H-shares as well through Connect
Ans: Regulators allowed insures to invest, but not too aggressively . so we expected the worst hammering passed.
3) Liquidity normally weak going into CNY? Looks like reverse repos expired yesterday as well?
Ans: Money tightness ‘s seasonal by the end of the year, and this year people should worry about bond risk and CNYUSD risk as well, so liquidity could be weak into CNY and PBOC should provide more rev repo into the holiday season.
4) As trump potentially bringing in inflation, China have a potential trade war with US. so have an OPEC deal which brings inflation again. feels like inflation in china is strong, PMI, CPI and money supply in general; i think an interest rate hike in china is not impossible. in particular with CNY deprec pressures and the fx reserves right a 3trillion;
either deprec the currency strongly and take out liquidity from market as inflation is starting to look strong,or increase the rate and hurt the property mkt, either way its very big headwinds.
Ans: it's not that helpful to foresee CPI as it;s on energy and food prices mostly, which are not that predictable , but it's ok to watch commodities and CNYUSD more close; it's too early to call for strong inflation, given under 6.5% growth won't fuel much demand for commodities.
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