On this Week’s Market Summary:
💡1. Chinese stocks rallied after Beijing pledged it would take measures to support the economy and shares in the rest of the region broadly followed Wall Street higher after the US Federal Reserve raised interest rates for the first time since 2018. Hong Kong’s Hang Seng index jumped almost 6 percent on Thursday, while the CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 2.5 per cent. Those gains took the benchmarks 15 and 7 percent higher, respectively, after China moved to stem double-digit falls earlier in the week, sparked by concerns over the country’s growth outlook. The rally in Chinese shares marked the second day of strong gains after China’s Financial Stability and Development Committee promised “substantial measures” to shore up growth and flagged other supportive actions.
💡2. Chinese tech stock rout deepened, slashing billions of dollars from the likes of Alibaba Group Holding and Tencent Holdings in Hong Kong. Losses spiralled after JPMorgan Chase downgraded 28 Chinese internet stocks including Alibaba, Tencent Holdings and Meituan to underweight, calling them “uninvestable” over the next six to 12 months due to rising geopolitical and macro risks. Hang Seng Index hit a new six-year low as more than US$460 billion of market value from tech stocks evaporated this year; Alibaba crashed by a record 12 percent.
💡3. While the market expected a figure of 4.5 percent for 2022, Beijing instead announced a notably ambitious 5.5 percent target, ahead of my own expectation of 5 percent. While light on details, Li indicated that policy to drive growth would include some tax reductions and employment support. Monetary policy will also be central to this effort. We have already seen substantial divergence in monetary policy between China and the US since the start of the pandemic, but we can expect an even wider gap this year as Beijing policymakers shower the economy with stimulus to meet the government’s high bar, all while the US Federal Reserve tightens monetary policy to tackle inflation.
💡4. The UK markets regulator is consulting with asset managers about introducing an “exceptional” measure to help limit the damage to investors from Russia’s invasion of Ukraine. The Financial Conduct Authority said it is considering authorising UK retail funds to use so-called “side pockets” to segregate Russian and Belarusian assets. If the regulator goes ahead, side pockets will make it possible for fund managers to separate out Russian and Belarusian assets they cannot sell or value from their other investments, allowing investors to enter funds without gaining exposure to Russia. Those currently locked in could exit their positions and frozen funds could restart dealing.
One of the must-ask interview questions for banking and finance is: “Have you read any news recently?”, with the follow-up questions: “How would you link this news to the market and what investment suggestions would you give to your clients based on this news?”
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Showing your market sense and ability to provide feasible investment ideas would help to differentiate you from other candidates. Therefore, apart from the weekly news update / investment insights, we have also generated this Weekly Market Summary for you to have a quick understanding of the market development and tips to answer some hot discussion topics. Take a look of the summary and WhatsApp us in the group if you have questions.
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