China’s equity rally is driven by a combination of improving fundamentals, more inflows, and a sudden change in sentiment.
Beijing shifted its policy from building a “strong currency” to a more pragmatic approach.
Chinese banks have become less vulnerable than three years ago thanks to Beijing’s de-risking efforts since 2017.
Chinese economy continued its recovery in May as all activity indicators improved from April, although the pace was slower than expected. The People’s Bank of China (PBOC) did not think it was problematic as it kept policy rate unchanged for the second straight month.
China rates have jumped significantly from the bottom as the PBOC stopped cutting policy rates and the economy continued to recover.
It is unlikely for Washington to end its other “special treatments” for Hong Kong because it hurts the Americans even more.
China’s A-share listed firms suffered significantly at the beginning of 2020 because of the COVID-19 pandemic.