Another week, another slide in the RMB. Down 3.6% since March, dear readers. The assumption has to be 7 by Christmas, if not before before, aiming for – who knows? 8.3? It’s a boost for the black market money channels through Hong Kong, and somewhat of a blessing for exporters. But overall, it raises the doubt level on the fundamentals of the Chinese economy.
How’s the Shanghai stock market doing, you ask? Dodging around 3,000, nothing much going on there, beyond saying it looks like the National Team is continuing to burn some serious cash to keep the number up. On the 19th Party Congress (Nov 2017) watch, there were suggestions this week of battlelines being clarified on the reform versus no-reform front, and our money would still be on the no-reformers winning out at the crucial 19th. There’s still a long and opaque road from here to there, but it would appear, through a Chinese glass darkly, to be a tough and upwardly-spiraling discussion.
Of more interest right now are ex-China developments. Our view on Brexit – that in the end it won’t happen – has not changed during the past week, and our fascination with US politics continues to grow. Hillary escaped from her emails problem and the Republican convention in Cleveland is just around the corner. Will China get a mention in the midst of the Trump extravaganza? There is so much else to distract the delegates, but we certainly hope the show doesn’t ignore the Middle Kingdom completely. Saving all the showboating vitriol for Mexicans and Muslims is just not fair. Equal time! Have a pleasant summer weekend.