HALISTER1: China FX Reserves Data Likely to Reflect Brexit Boost: Analysts

China FX Reserves Data Likely to Reflect Brexit Boost: Analysts

(Bloomberg) -- China’s FX reserves likely buffered by investors hunting for yield after Brexit vote, analysts say, with median est. seeing $5b drop to $3.2t in July.
  • Reserves fell $125b in 1H
  • With global bond yields edging lower, many fund managers are increasing their portfolio in Asian bonds, including Chinese ones, helping offset outflows, OCBC economist Tommy Xie says
    • Capital restrictions could also moderate outflows in 2H as many investors have used up their yearly $50k quota on sending money overseas; expects July reserves fell $10b
  • Global investors hunting for yield leads to more flows into China, mitigating yuan depreciation pressure, Commerzbank senior economist Zhou Hao says; forecasts reserves to rise $5b
  • Valuation effect may have added $7b to headline reserves in July, mainly due to EUR gaining vs USD, RBC Capital Markets head of Asia FX strategy Sue Trinh says
  • Yuan rose 0.12% vs dollar in July, gaining for first time in 4 months
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Hao Zhou (Commerzbank AG)
Sue Trinh (Royal Bank of Canada)
Tommy Xie (Oversea-Chinese Banking Corp Ltd)

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