Market volatility below US president Donald Trump and the rising enchantment of yuan property imply a increase for Normal Chartered Financial institution’s capital markets and buying and selling enterprise this 12 months, based on a senior govt.
Trump’s inflationary coverage plans and tariff rhetoric on China and different international locations are shifting the markets – altering bets on rates of interest, overseas alternate and credit score, stated John Thang, the financial institution’s head of markets and strategic shopper administration and options for Hong Kong and Higher China, in addition to North Asia.
“The market has been fluctuating each time Trump made a gesture or with out saying something, not to mention if he stated one thing,” Thang stated.
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Normal Chartered, certainly one of Hong Kong’s three note-issuing banks, has already seen elevated demand for foreign-exchange administration and hedging. The necessity for firms and monetary establishments to handle dangers will continue to grow, Thang stated.
Yuan-related danger administration will likely be a major matter for market contributors, because the foreign money has been fluctuating, he added.
The onshore yuan has weakened by 1.98 per cent in opposition to the US greenback for the reason that US presidential election in November, as China’s central financial institution continues to carry the road within the face of considerations over the nation’s financial outlook in Trump’s second time period.
Normal Chartered expects the foreign money pair’s alternate fee to be between 7.2 yuan and seven.4 yuan this 12 months.
China would depend on financial instruments equivalent to interest-rate cuts and financial insurance policies equivalent to issuing debt to resolve its home issues whereas heading off Trump’s tariff threats, Thang stated.
John Thang, head of markets and strategic shopper administration and options at Normal Chartered, pictured on January 23, 2025. Picture: Aileen Chuang alt=John Thang, head of markets and strategic shopper administration and options at Normal Chartered, pictured on January 23, 2025. Picture: Aileen Chuang>
“[China] will proceed with such measures this 12 months, and I do not assume [it] will drastically depreciate the yuan to cope with commerce tariffs,” he stated.
US and China bond yield spreads have tracked the foreign money pair’s motion, widening in the previous few months and driving the yield for 10-year Chinese language authorities bonds beneath 2 per cent. Bearish investor sentiment and the expectation of decrease rates of interest have continued to entice cash into the China bond market.
