Xi’s Markets Shakeup Surprised Insiders, Showing Alarm Over Rout; China Stock Rally Extends After Surprise Top Regulator Shakeup
China’s Former Defense Minister Wei Missing from Greeting List
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Xi’s Markets Shakeup Surprised Insiders, Showing Alarm Over Rout
Bloomberg
Yi Huiman, the Chairman of the China Securities Regulatory Commission (CSRC), has been removed from his position amidst a 4-year market meltdown. The CSRC has been working intensively to restore confidence in China's tumbling stock market and the removal of its chairman has sent shockwaves through the industry. The move could indicate additional measures to revive China's second-largest stock market, however, market analysts believe that more is needed to address structural macro headwinds and boost investor confidence.
China Stock Rally Extends After Surprise Top Regulator Shakeup
Yahoo US
Chinese shares have continued to rally as authorities look to stem a $7tn rout by replacing the head of the country's securities regulator. The decision to replace China Securities Regulatory Commission Chairman Yi Huiman with banking and regulation expert Wu Qing suggests authorities are increasingly concerned about the economic and social damage caused by a struggling stock market. The move comes after China implemented a number of rescue measures to stem the rout, including trading curbs and support from the nation's sovereign wealth fund.
China’s Former Defense Minister Wei Missing from Greeting List
Bloomberg
China's former defense minister, Wei Fenghe, has been left off a list of retired cadres who received greetings from the top leadership, sparking speculation about his fate after a purge of military officials. Wei, who served as defense minister from 2018 to 2023, was replaced by Li Shangfu, who was then abruptly ousted in October. China has recently been cracking down on corruption in the military, with over a dozen senior defense figures being ensnared in a graft probe. US intelligence has suggested that widespread corruption has undermined China's military capabilities.
Quant Hedge Funds Suffer Rare Losses in China Stock Meltdown
Bloomberg
China's stock market slump is impacting quantitative hedge funds, whose computer models have helped them outperform human traders in recent years. In January, private quant funds suffered an average loss of 7.2%, compared to the 6.3% drop in the benchmark CSI 300 stock index. The slump in small-cap stocks, combined with newly imposed curbs on short trading, are posing fresh challenges for quants, who rely on algorithms to trade stocks, bonds and commodities. A rebound from the recent decline would prove their resilience and attract investors frustrated by the more volatile performance of human traders. Chinese quants have performed better than their peers abroad, with the top 32 funds outperforming the active managers in the same size range in 2023. Despite recent concerns, quant investing is expected to gain more popularity among investors, with some discretionary funds already embracing AI.
Battered China Stock Traders Watch Holiday Spending Signals
Bloomberg
Traders are looking to China's Lunar New Year holidays, which run from 9-17 February, for signals about the health of the world's second-largest economy. While expectations are low due to a bleak economic outlook, analysts say that spending data from the holiday period could provide insights into consumer sentiment. Holiday-linked sectors to watch include domestic travel, outbound travel, alcoholic beverages, sportswear, box-office ticketing, and the casino industry. Investors will be watching for signs of strength or weakness in these sectors to gauge the impact of the Lunar New Year on the Chinese economy.
China Is Oversupplied With Commodities as Deflation Persists
Bloomberg
China's commodities markets are facing deflation on both the consumer and producer sides of the economy. Weak aggregate demand is the main issue for policymakers, but oversupply is also a problem due to last year's high imports. Energy markets, in particular, are expected to be affected by warmer weather and tepid industrial demand. Grain markets also face challenges due to ample supply, and the outlook for pork is gloomy. However, metals markets may prove more resilient, with the global copper market tightening and green demand increasing. The government's response to the economy's problems will be crucial, as will demand once China's construction season begins in March.
China’s Consumer Prices Drop at Fastest Pace Since 2009
Bloomberg
China's consumer prices fell at the fastest pace since the global financial crisis last month, dropping 0.8% YoY, worse than economist expectations for a 0.5% decline. China has been facing falling prices for much of the last year as the country struggles to revive domestic demand and consumer confidence. Deflationary pressures are a concern for China as it risks a downward spiral where people hold off on making purchases due to expectations that prices will continue to fall, which would hurt overall consumption and spill over to businesses. Economists expect deflationary pressure to continue for at least another six months, largely due to the real estate turmoil.
Chinese Bitcoin Miners Find a New Crypto Haven in Ethiopia
Yahoo US
Chinese bitcoin miners are flocking to Ethiopia, lured by low electricity costs and an increasingly friendly government, according to unnamed industry executives. Ethiopia, which still bans cryptocurrency trading, has forged closer ties with China over the past decade, and several Chinese companies helped build the Grand Ethiopian Renaissance Dam, from which the miners plan to draw their power. Ethiopia has emerged as an increasingly rare opportunity for bitcoin miners, due to concerns about climate change and power scarcity in other countries. However, it is a gamble for both the miners and Ethiopia, as developing countries have initially embraced bitcoin mining before turning on the sector when energy use threatened domestic discontent.
Who Is China’s New Securities Regulator, the ‘Broker Butcher’
Bloomberg
China has appointed Wu Qing, a 58-year-old market veteran, as the new chairman and Communist Party chief of the nation's securities regulator. Wu, nicknamed 'Broker Butcher' due to his previous crackdown on securities companies and insider trading, faces the challenging task of addressing the slump in China's stock market, as well as attracting foreign financial firms to China. The appointment sparked a small rally in China stocks, with the onshore benchmark CSI 300 Index rising 0.7% in early Thursday trading.
Xi Can’t Use 2015 Playbook to Calm China Markets, Investors Say
Bloomberg
China's efforts to arrest a $7tn stock market rout are evoking memories from 2015, when Beijing took drastic steps to stem a crash. This time, investors say, the problems are much more entrenched. Authorities have snapped into crisis mode to support China’s tumbling markets, taking aim at short-sellers and freeing up cash for banks, while state funds are boosting purchases. Signaling the growing alarm, China abruptly ousted its market chief Yi Huiman on Wednesday, rolling out another hallmark of the near decade-old blueprint to boost stocks.
China lashes out at 'chaos and disorder' behind Fukushima radioactive waste water leak
Yahoo US
China's embassy in Japan has criticised the Tokyo Electric Power Company (TEPCO) and the Japanese government after a leak of radioactive waste water from the Fukushima nuclear power plant. TEPCO has reported that about 5,500 litres of water is estimated to have leaked from a caesium absorption tower after a valve was left open during cleaning work. China has been one of the fiercest critics of the decision to release 1.34 million tonnes of treated waste water over 30 years into the Pacific Ocean from the Fukushima plant, which was wrecked by an earthquake and tsunami in 2011.
Siemens Sees Sharp Decline in China Factory-Automation Orders
Bloomberg
Siemens has reported a 31% drop in orders for its digital industries division in its fiscal first quarter. The decline was largely driven by weaker private consumption in China. However, the company expects the Chinese economy to recover later in the year, stating that the government’s push to boost high-tech manufacturing will help stimulate the economy. Siemens’ mobility unit, on the other hand, saw orders almost double from the same period a year earlier, due to two orders totalling €1.3bn ($1.4bn) from existing agreements for train delivery in Austria.
North Korea Strikes Down Laws on Economic Cooperation With South
Bloomberg
North Korea's parliament has abolished laws for economic cooperation with South Korea, further driving a wedge between the two neighbours. The move follows an announcement last month by leader Kim Jong Un that it was impossible to seek peaceful reunification. The laws had provided a formal basis for the operation of a mountain resort and factory park north of the border, both of which have been closed for years due to political disagreements. Trade between the two Koreas has dropped to virtually zero from $2.7bn in 2015.
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