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Foreign investors dump Chinese stocks at record pace

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Foreign investors dump Chinese stocks at record pace

International buyers have dumped a document $6bn value of Chinese language shares within the first three months of 2022 as they take fright at new coronavirus outbreaks and the chance that western nations will sanction Beijing if it helps Russia’s battle in Ukraine.

Chinese language shares took a heavy blow in the beginning of this week as Covid-19 circumstances surged in main cities like Shanghai and Shenzhen, extending declines which have confirmed persistent within the 12 months up to now.

Native investments have edged again up after Beijing signalled it could take a set of market-friendly measures. However overseas holdings of shares listed in mainland China haven’t.

That divergence, buyers and fund managers say, displays a number of considerations which have battered valuations even of firms that led the China shares rally of 2020, when the market posted world-beating features on the again of Beijing’s early success with its strict “zero-Covid” coverage.

“For the final two weeks, Chinese language equities have been in an ideal storm,” mentioned Pruksa Iamthongthong, senior funding director for Asian equities at fund administration big Abrdn. She added world investor confidence in Chinese language shares “is so low that a few of this volatility will proceed”.

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Pat Lu, a Hong Kong-based portfolio supervisor for Neuberger Berman who specialises in rising markets, added that “after we are broadly petrified of the markets, we’re skewed to search for danger and that’s what is occurring”.

Chinese language equities have lagged all 12 months. The benchmark CSI 300 index is simply 4 per cent above the place it stood on the finish of 2019, when the primary Covid-19 outbreaks have been reported in China. The Nasdaq Golden Dragons index of enormous Chinese language tech teams listed in New York has dropped by a few quarter.

By comparability, over that very same interval the US’s S&P 500 and tech-focused Nasdaq Composite have risen roughly 37 and 52 per cent, respectively.

International outflows by means of Hong Kong’s so-called inventory join buying and selling schemes with Shanghai and Shenzhen started on March 7, however intensified dramatically earlier this week.

By Friday’s shut, internet gross sales by offshore buyers this 12 months totalled nearly Rmb40bn ($6bn), on observe to mark the worst quarter since that link-up scheme started in 2014. The sell-off marks a pointy distinction from 2021, when internet inflows by means of the scheme topped Rmb430bn.

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Buyers pointed to 3 important drivers of overseas gross sales: renewed considerations over potential delistings for Chinese language shares buying and selling in New York, the surge of Covid-19 circumstances in main mainland cities together with Shanghai and Shenzhen, and considerations over the potential for China offering assist to Russia in its invasion of Ukraine.

On Tuesday, after China shares notched their second day of double-digit falls, JPMorgan downgraded 28 of the 29 China web shares it covers to underweight or impartial. “We advocate buyers keep away from China web on a six- to 12-month view,” the analysts wrote, describing the sector as “unattractive, with no valuation assist within the close to time period”.

An government on the Hong Kong arm of 1 world hedge fund mentioned the beginning of the week “felt like 2015”, when the leverage-fuelled inventory bubble popped seven years in the past.

However on Tuesday, Liu He, a vice-premier and President Xi Jinping’s closest financial adviser, introduced the federal government would take measures to “increase the financial system within the first quarter” and introduce “insurance policies which might be beneficial to the market”.

State media instantly backed up He’s message with reviews on speaking factors from a particular assembly of China’s monetary stability committee he had simply chaired, which included a name to “rapidly full rectification of China’s massive tech platforms” and a transfer to scrap regional test-runs for property taxes that had weighed closely on property builders.

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“The message may be very clear: the Chinese language authorities needs to ship a robust sign of market assist,” mentioned Jessica Tea, funding specialist for Higher China and Asia Pacific equities at BNP Paribas Asset Administration. “It looks like they’re pausing regulatory tightening to offer extra assist and shore up market confidence.”

The slew of market-friendly guarantees from Beijing was swiftly adopted by some world funding banks transferring to improve Chinese language shares.

Credit score Suisse introduced on Thursday it was elevating its allocation to Chinese language equities to obese as Michael Strobaek, the financial institution’s world chief funding officer, flagged Beijing’s transfer as “vital”.

Line chart of Stock indices (rebased to 100) showing Chinese shares go from pandemic leaders to laggards

Strategists at Citigroup additionally upgraded China equities to obese on Thursday, saying that if authorities delivered on their pledges “it could take away nearly the entire overhangs over Chinese language equities that the market had been involved about”.

However each banks framed their intent to purchase extra shares as “tactical” — usually a sign that purchasing will probably be restricted or will goal particular shares, relatively than improve publicity to China’s market as a complete.

Analysts additionally warned that after a lot ache for Chinese language shares through the previous 12 months, it could take time and concrete motion to regain the boldness of world buyers who had been burnt repeatedly.

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Thomas Gatley, an analyst with Beijing-based consultancy Gavekal Dragonomics, mentioned the committee’s assertion was “couched in phrases that have been so constructive that in the event that they don’t ship over the course of the subsequent month . . . we’ll see one other drop in markets”.

Gatley added that like many pledges from high officers, the assertion was rigorously worded to offer believable deniability if Beijing’s priorities all of the sudden shifted or regulators pushed forward with disruptive enforcement measures that have been already in prepare.

“That [approach] works fairly properly for macroeconomic coverage usually and governance of a giant, various nation,” he mentioned. “Nevertheless it’s not so nice for market signalling.”

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Democratic party’s ‘Trump is weird’ strategy rattles Republicans

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Democratic party’s ‘Trump is weird’ strategy rattles Republicans

Kamala Harris has attacked Donald Trump as a threat to individual freedom, economic security and the rule of law in the US since launching her White House campaign nearly two weeks ago.

But the vice-president and her Democratic allies have found a novel way of describing Trump and the Republican party that is unnerving their opponents: describing them as “weird”.

“Some of what he and his running mate are saying, it’s just plain weird,” Harris said during a fundraiser last weekend, as the audience laughed. “I mean, that’s the box you put that in, right?”

Democrats have been trying to portray Trump and his followers as part of an extreme rightwing fringe of American politics for years, including after the January 6 2021 attack on the US Capitol, with mixed success.

But the hardline views on abortion and disparaging comments on women by Trump’s running mate, Ohio senator JD Vance, have highlighted a fresh line of attack from the Democrats. Quips such as Vance’s in a 2021 speech that America was run by “childless cat ladies” have gone viral online, turbocharging the new strategy.

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“These are weird people on the other side, they want to take books away, they want to be in your exam room, that’s what it comes down to,” Tim Walz, the Democratic governor of Minnesota and contender to be Harris’s running mate, told MSNBC two days after she entered the race.

An independent Harris supporters group called “Won’t Pac Down” last month launched an ad called “these guys are just weird” that has since gone viral featuring a series of creepy male “Maga Republicans” saying they want the “government way more involved in your sex life”.

“These opinions that mainstream Republicans in a lot of cases are holding, are honestly just bizarre,” said Travis Helwig, a television producer who created the ad, which is aimed at younger voters.

He added the attack appears to be resonating because while Trump and his allies “enjoy being called threats to democracy”, “‘weird’ is clearly getting under their skin” more.

“It does seem like they’re spiralling a little,” he added.

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Trump and his allies have failed to find an effective response. During his appearance at a conference for black journalists in Chicago this week, the Republican former president oddly questioned Harris’ Black identity, saying it was contrived, triggering a fierce backlash from across the political spectrum.

By Thursday, he was on a conservative podcast trying to defend himself. “I’m a lot of things, but weird I’m not,” Trump said. 

Donald Trump, left, questioned Kamala Harris’s Black identity at a conference this week © Reuters

Republicans are instead accusing Democrats of being petty and hypocritical. “This whole ‘they’re weird’ argument from the Democrats is dumb & juvenile. This is a presidential election, not a high school prom queen contest,” Vivek Ramaswamy, the former biotech investor who ran for the Republican nomination but dropped out and endorsed Trump, wrote on X. 

Democrats have maintained their line. “If Republican leaders don’t enjoy being called weird, creepy, and controlling, they could try not being weird, creepy, and controlling,” Hillary Clinton, the former secretary of state and first lady, also wrote on X.

Martha McKenna, a Democratic strategist, said the Harris campaign’s approach reflected a change from Biden’s message. Not only is it focusing on the concept of defending “freedom” more directly, it’s also bringing some levity to the criticism.

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McKenna said: “I think that the Biden campaign was really focused on the threat to democracy and very high level concepts, which are still very important and very relevant to the presidential campaign. But with this change of candidate, there comes a change of language and a moment in time where you can do a bit of a refresh.”

The Harris campaign’s shift comes as the candidate is building her team of political advisers for the dash to the November election, which is less than 100 days away.

While Harris is retaining Jen O’Malley Dillon as campaign chair — the same role she had for Biden — she has also brought in David Plouffe and Stephanie Cutter, former political advisers to Barack Obama, to help.

Stephanie Cutter speaks in an interview
Stephanie Cutter © Getty Images
David Plouffe
David Plouffe © Getty Images

In addition to the ‘weird’ trope, the Harris campaign continues to focus on serious issues around the Republicans and the implications of the election.

At a fundraiser on Fire Island on Friday, Doug Emhoff, Harris’ husband, said: “We’ve got to push back on that despicable person and his little side kick,” referring to Trump and Vance respectively, and calling the Republican vice-presidential nominee an “extremist and an opportunist”. “We know who he is. He’s told us. He wants to literally just change the way that you all live, the way that we all live,” Emhoff said.

Amy Walter, an independent political analyst at the Cook Political Report with Amy Walter, said Harris is aware that while the attacks on Republican strangeness may be catchy for now, the election will probably be decided on swing voters’ perceptions of the economy.

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“Harris’s first ad doesn’t talk about Trump being ‘weird’ but instead argues that Trump ‘wants to take our country backward to give tax breaks to billionaires and big corporations and end the Affordable Care Act’,” Walter wrote in a note on Friday.

Still, the jibes against Trump and his allies are expected to continue, with the line on oddness ingrained in talking points.

“[Trump] is clearly older and stranger than he was when America first got to know him,” transport secretary and possible Harris running mate Pete Buttigieg, said on Fox News Sunday last month.

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Firefighters continue battling massive wildfire in California ahead of thunderstorms

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Firefighters continue battling massive wildfire in California ahead of thunderstorms

A CL 415 scooper, top, drops water on the Quarry Fire as a Firehawk helicopter maneuvers for a water drop Thursday, Aug. 1, 2024, southwest of Littleton, Colo.

Andy Cross/AP/The Denver Post


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Andy Cross/AP/The Denver Post

CHICO, Calif. — Firefighters made progress Saturday against California’s largest wildfire of the year ahead of expected thunderstorms that could unleash fire-starting lightning and erratic winds and erode progress made over the past week. Dry, hot conditions posed similar threats across the fire-stricken West.

“We’re not completely out of the woods yet, but we’re looking very, very good,” CalFire official Mark Brunton said in a video update Saturday. “This is moving at a very fast pace.”

Containment of the Park Fire, now California’s fourth-largest wildfire on record, was at 27% as of Saturday afternoon. Brunton said the relatively milder weather the last few days allowed firefighters to build containment lines.

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But hotter weather, fuels and terrain will continue posing challenges for the estimated 6,500 firefighters battling the fire, which has spread over 626 square miles (1,621 square kilometers) since allegedly being started by arson in a park in the Sierra Nevada foothills east of the Sacramento Valley city of Chico. For comparison, the city of Los Angeles covers about 503 square miles (1,302 square kilometers).

Suppression crews will also start removing damaged infrastructure in some areas Saturday. People living in the rural communities of Cohasset and Forest Ranch were told they could start returning home Saturday afternoon.

The fire originated at low elevations, where it quickly burned through thick grass and oaks, destroying at least 567 structures and damaging 51 so far. As it has climbed higher, the vegetation has changed to a greater concentration of trees and brush, Cal Fire said.

The fire’s push northward has brought it toward the rugged lava rock landscape surrounding Lassen Volcanic National Park, which has been closed because of the threat. The area remains one of the biggest challenges for firefighters, Cal Fire officials said Saturday afternoon. The smoke has also prevented firefighters from deploying helicopters and other aircrafts the last few days.

“There’s a lot of really steep drainages in that area,” CalFire spokesperson Devin Terrill said. “It takes a lot more time to access those areas.”

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After a brief respite, firefighters are now bracing for treacherous conditions of hot and dry weather, along with expected thunderstorms with potential thunder strikes and gusty winds.

The collapse of thunderstorm clouds can blow wind in any and all directions, said Jonathan Pangburn, a fire behavior analyst with Cal Fire. “Even if there’s not lightning per se, it is very much a safety-watch-out environment for our firefighters out there,” Pangburn said.

The Park Fire is among almost 90 large fires burning across the western U.S. Evacuation orders were in effect for 22 of the fires, according to the National Interagency Fire Center.

Onlookers watch while crews work near the Ken Caryl Ranch development as the Quarry fire burns Thursday, Aug. 1, 2024, southwest of Littleton, Colo.

Onlookers watch while crews work near the Ken Caryl Ranch development as the Quarry fire burns Thursday, Aug. 1, 2024, southwest of Littleton, Colo.

AAron Ontiveroz/AP/The Denver Post


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Crews made progress Saturday against three major fires burning in Colorado near heavily populated areas north and south of Denver, with containment figures improving and some evacuation orders lifted. One of the fires was being investigated as arson. About 50 structures had been damaged or destroyed, about half of them homes, and one person was found dead in a burned home earlier in the week.

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The Jefferson County Sheriff’s Office is investigating a blaze threatening hundreds of homes near the Colorado city of Littleton as arson.

Karlyn Tilley, a spokesperson for Jefferson County Sheriff’s Office, said the investigation is ongoing, and investigators are using a dog specially trained to sniff out sources and causes of fires. Tilley said just because they suspect the fire was human-caused doesn’t mean it was intentional.

Firefighters were making good progress on the fire despite the steep, rocky terrain and blistering heat, and no houses had been burned, officials said.

The cause and origin of a fatal blaze west of the town of Lyons was being probed by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, with specially trained fire investigators from the agency helping local authorities, agency spokesperson Crystal McCoy said. The area blackened by that fire remained relatively unchanged after it burned five houses.

The largest of the Colorado fires, west of Loveland, grew to 14.9 square miles (38.5 square kilometers) after previously burning 49 homes and other structures. Its cause is under investigation.

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Scientists say extreme wildfires are becoming more common and destructive in the U.S. West and other parts of the world as climate change warms the planet and droughts become more severe.

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Venezuelan opposition leader emerges from hiding at rally amid crackdown

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Venezuelan opposition leader emerges from hiding at rally amid crackdown

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Venezuelan opposition leader María Corina Machado emerged from hiding on Saturday to appear at an anti-government rally in Caracas, despite a violent crackdown on dissent by the socialist government of Nicolás Maduro.

Machado, who had not been seen in public since Wednesday after Maduro and members of his inner circle publicly called for her jailing, waved a Venezuelan flag from atop a small lorry to the cheers of thousands of supporters.

“We have never been as strong as today, never,” Machado said. “The presence of every one of you here in the streets shows the world the magnitude of our strength and our determination to reach the end.”

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Protests broke out in the South American country on Monday after Maduro claimed victory in a presidential election by a seven point margin over opposition candidate Edmundo González. The National Electoral Council, which is controlled by Maduro’s allies, has refused to publish a detailed breakdown of the results.

The opposition declared González as the real winner with 7.1mn votes compared to Maduro’s 3.2mn, and posted thousands of polling station receipts as evidence. The US on Thursday recognised González as the winner, a move followed by Ecuador, Uruguay, Costa Rica, and Panama. Maduro’s victory was recognised by key allies China, Russia, Iran and Cuba, among others.

González, a retired diplomat, stood as a surrogate of the charismatic Machado, who was banned from running in January, months after she won a primary in a landslide. The Carter Center, a US non-profit organisation and the only independent body in Venezuela to evaluate the election, said the vote “did not meet international standards of electoral integrity at any of its stages”.

Maduro has referred the election dispute to the supreme court, which is controlled by the government. On Friday González did not show up to a hearing in which all 10 candidates in the election were summoned.

On Saturday, supporters from poorer neighbourhoods and the middle classes turned out in the well-to-do Las Mercedes neighbourhood to see Machado, apparently unbent by a crackdown on sporadic protests that began in downtrodden neighbourhoods of the capital on Monday. 

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Since Monday, at least 19 people have been killed according to rights group Provea, and Maduro has claimed that 2,000 people have been arrested. Machado wrote in US media on Thursday that she had gone into hiding amid fears of her imminent arrest. The opposition’s campaign offices were broken into and vandalised in the early hours of Friday morning.

“We are all scared, but what scares me more is continuing under this tyranny,” said Luis Guersi, a 43-year-old engineer at the rally on Saturday.

Colonia Pérez, 34, a street vendor and mother of three, said she had turned out “for the future of my children”.

Maduro, who has presided over an economic crisis, deepening repression, and the exodus of 7.7mn Venezuelans since succeeding the late populist Hugo Chávez in 2013, has framed the protests against his self-declared re-election as a Washington-backed “fascist” coup attempt.

“The extreme right means hatred, vengeance, foreign interventionism and war,” he told supporters and public sector workers at a rival rally in central Caracas on Saturday.

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Earlier on Saturday morning, US assistant secretary of state Brian Nichols said cases of arbitrary arrest, vandalism of opposition officers and violence towards peaceful protesters will be referred to the UN Human Rights agency.

“Having seen the will of the Venezuelan people at the ballot box, Maduro and his representatives have resorted to repression,” Nichols wrote on X. “These acts are unacceptable and demonstrate Maduro’s reliance on fear to cling to power.”

At Machado’s rally, supporters said they would continue to demonstrate in support of González’s victory.

“We want a free Venezuela,” said Deysi Barrios, a publicist whose family has fled the country. “If we don’t rid ourselves of this dictatorship now, we never will.”

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