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Chinese Media Takes Positive Tone, Saying ‘Fight Back’ is On

Chinese Media Takes Positive Tone, Saying ‘Fight Back’ is On

Renee Mu, Currency Analyst

- Major Chinese media changed tone on the outlook of Chinese stock markets; moving towards positivity.

- Reforms on the state-owned enterprises and health care systems are moving forward with breakthroughs.

- Recent drops in Chinese stocks may hasten the rollout of the Shanghai-Hong Kong Stock Connect program (SHSC).

Market Sentiment

Sina News: China’s most important online media source, similar as CNN in the US. Also owns a Chinese version of Twitter, called Weibo, with around 200 million active usersmonthly

Comments on the Stock Market:

  • Positive tone (emphasis on pulling back in down-trend): 3 headlines, 8 general pieces.
  • Neutral tone (facts & discussion): 0 headline, 3 general pieces.
  • Negative tone (concern on the outlook): 0 headline, 3 general pieces.

Overall tone: Positive.

Hexun News: Chinese leading online media of financial news

Comments on the Stock Market:

  • Positive tone (emphasis on pulling back in down-trend): 3headlines, 4 general pieces.
  • Neutral tone (facts & discussion): 2 headlines, 5 general pieces.
  • Negative tone (concern on the outlook): 0headline, 2 general pieces.

Overall tone: Positive to Neutral.

Sohu News: Chinese top three online media

Comments on the Stock Market:

  • Positive tone (emphasis on pulling back in down-trend): 1 headline, 4 general pieces.
  • Neutral tone (facts): 1 headline,5 general pieces.
  • Negative tone (concern on the outlook): 2 headlines, 3 pieces.

Overall ton: Neutral.

Headline News

Sohu News:

- Local governments are accelerating the asset-securitization process. State-owned enterprises worth a total amount of 30 trillion yuan or more are expected to enter the stock market in the following years. Asset-securitization is the most important reform on stated-owned enterprises. It could help them change to a mixed-ownership structure from the current state-controlled structure. As of today, 20 provinces have released their asset-securitization targets. The average target asset securitization ratio is above 50%.

Sina News

- Chinese State Council issued Guidelines to integrate health care systems in urban and rural areas and to establish a standard system. This requires employers to provide basic insurance to migrant workers. This is another step in Chinese health care reform. Chinese households traditionally have high savings rates in order to cover two major costs: health care and education. Reforms in the health care system will help to release stored capital in the long run, and in-turn bring additional momentum to domestic consumption within the economy.

- Hong Kong’s Hang Seng Index dropped below 20,000 following the Yuan’s devaluation. Plunges in both Hong Kong and mainland markets may speed up the launch of the Shenzhen-Hong Kong Stock Connect (SHSC) program, which was originally planned to release in the second quarter of 2016. The scheme will allow investors in Hong Kong and Shenzhen markets to trade individual stocks listed on the other exchange. Unlike the widely-blamed circuit-breaker system, a pioneer program, Shanghai-Hong Kong Stock Connect, was launched in November 2014 and showed promise, which adds more confidence to the SHSC program.

Caixin News:

- Overnight Yuan HIBOR jumped to record high of 66.82%. This is a side effect of the PBOC stamping out Yuan short speculation by increasing borrowing costs. China’s central bank has two ways to intervene towards Yuan’s liquidity at the offshore market: One is to purchase Yuan and sell the Dollar through agent banks in the foreign exchange market. The other is to reduce the Yuan’s supply at Hong Kong commercial banks. The spokesman of Hong Kong Monetary Authority said today that the HIBOR system is functioning well overall. The authority has increased yuan’s liquidity appropriately.

More detailed analysis about last night’s HIBOR read Offshore Yuan Rate Jumps to 66.82% - What is Going On?

Written by Renee Mu, DailyFX Research Team

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.