The latest global market volatility has reinforced China's status as a distinct market, even if its growth has slowed recently. While U.S. tech stocks plunged and Japanese stocks swung wildly in a historic two days of price action , Chinese stocks suffered less . As of the end of the Asia trading week Friday, before the U.S. market open, the Nasdaq 100 and Nikkei 225 were both down by about 2.5% over the last five trading days, according to Wind Information.
analysts pointed out in an Aug. 6 report. That's left net inflows from both fund types at 13 billion yuan for the year through Aug. 2, the report said. On the flip side, semiconductor company Montage Technology and state-owned train company CRRC — both listed in Shanghai — led net inflows during that time, according to
. Both stocks have fallen over the last five trading days. The latest global market volatility was spurred in part by the unwinding of the Japanese yen carry trade, after the Bank of Japan's rate hike and growing expectations for U.S. rate cuts. A carry trade is a practice in which investors borrow money in a currency from a country with low interest rates, and invest in currencies with higher yields.
's multi-asset team expects a stock market sell-off from unwinding the Japanese yen carry trade could last one month. If the Fed does cut rates, that could support the case for Chinese stocks, Steven Sun, head of research, Qianhai Securities, and a team said in the Aug. 6 report. U.S. rate cuts would mean the People's Bank of China could then further ease its monetary policy, “which is critical for China's nascent property market recovery," the analysts said. They added that a weaker U.S. dollar makes the Chinese yuan more attractive to foreign inflows, while U.S. rate cuts are generally positive for emerging markets such as China.
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