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China Fund News Amman

In the morning session of August 5, peripheral stock markets experienced an epic plunge. After a brief decline in A-shares during the session, the three major stock indexes turned positive across the board by the midday close.

At the same time, the offshore RMB exchange rate against the U.S. dollar rose sharply, rising nearly 500 points in the morning, strongly regaining the four levels of 7.16, 7.15, 7.14 and 7.13, and once broke through 7.12, reaching a high of 7.1125.

Last week, the offshore RMB rose by more than 1,500 points against the U.S. dollar, rebounding nearly 2% during the week; the onshore RMB rose by more than 1,000 points against the U.S. dollar, recovering more than 1% during the week.

Regarding the strong appreciation of the RMB, Li Liuyang, a foreign exchange research expert at CICC, said that changes in the external environment leading to the closing of carry trades and the implementation of stable exchange rate policies may be the two main reasons for the recent rebound in the RMB exchange rate.

Looking ahead to the future trend, Li Liuyang believes that the flexibility of two-way fluctuations in the RMB exchange rate may increase. If the returns of overseas assets decline in the future and volatility increases systematically, it will be conducive to the return of cross-border capital and the strengthening of the RMB.

Japan, South Korea and other peripheral stock markets plummeted

On August 5, the Asian financial market was hit by a sudden storm. The stock markets of South Korea and Japan fell rapidly after opening, with the Nikkei 225 and Topix indexes falling by more than 6% and 8% respectively, even triggering the circuit breaker mechanism.

As of the close of the Japanese stock market in the morning, the Topix index fell 5.7% and the Nikkei 225 index fell 4.6%.

At the same time, the decline of South Korea's KOSPI50 index also expanded to 5%, and the Korea Exchange was forced to initiate a temporary suspension of trading. After a short suspension, the decline of South Korea's KOSPI50 index continued to expand to around 6%.

Taiwan's stock market also fell by more than 7%.

Australian stocks were not immune to the sell-off on Monday, with the S&P 200 falling more than 3% at one point, its biggest one-day drop since June 2022. It was the second consecutive day of declines for stocks ahead of the Reserve Bank of Australia's interest rate decision on Tuesday.

Bitcoin also crashed

Global high-value assets were sold off, and Bitcoin also suffered its biggest single-week drop since the collapse of the FTX exchange in 2022.

On the morning of August 5, Bitcoin fell rapidly, falling below the $53,000 mark. As of press time, Bitcoin is still down more than 10%, and the price has returned to above $54,000.

A shares reversed the trend and turned positive

As global stock markets plunged, the A-share market bucked the trend and strengthened. As of midday close, the Shanghai Composite Index rose 0.07% to 2,907.33 points, the Shenzhen Component Index rose 0.37%, and the ChiNext Index rose 0.42%. More than 3,200 stocks rose.

From the market point of view, the State Council issued the "Opinions on Promoting High-Quality Development of Service Consumption", which stimulated the overall rebound of the consumer sector today. Education, catering, liquor and other sectors led the gains.

Among them, the education sector had the highest growth rate, with Offcn Education hitting the daily limit for four days in five days, and Only Education, Kevin Education and Action Education hitting the daily limit.

The gaming sector also saw the largest gains, with Fuchun Holdings, Mingchen Health, Huicheng Technology, and Giant Interactive hitting their daily limit.

Analysts pointed out that the current funds in the A-share market show signs of rapidly switching to undervalued consumer stocks, mainly in the liquor, education, and medicine sectors.

Editor: Captain

Audit: Wooden Fish

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