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This article was published on 11 January 2016 at 09:13.
The last change is the January 11, 2016 at 11:27.
After a dramatic first week of the year (-7% on average performance of European markets ) European stock markets searching for the path bedding. Despite the new collapse of the Shanghai Stock Exchange, still heavily penalized by the volatility, the stock markets all rising travel (hence the performance of the main indices).
As mentioned was another tough day for the stock China: the Shanghai Composite Index lost 5.3%, while the Shenzhen index has yielded a heavier 6.21 percent. This thud of bags but has not been accompanied by any new devaluation of the yuan, which was the case in a very frequent last week.
The new recording on the face of China regards the decision of the Central Bank to intervene on the exchange rate by purchasing the yuan offshore, the parallel currency subject to market fluctuations and listed on the Hong Kong Stock Exchange. On the offshore yuan it is underway for some time a thriving speculation downward. Investors essentially borrow this currency, convert it into stronger currencies (like the dollar) and earn on the movements of the exchange rate because they are to repay less than you borrowed (in the meantime the offshore yuan depreciated) .
This little game (called “carry trade”) ends up amplifying the downward pressure also on the official currency. Now, however, the PBOC has decided to intervene in the market of Hong Kong offshore yuan buying through a pool of state-controlled banks. Purchases that have supported the currency and at the same time, making the market illiquid, causing a jump in interbank rates (HIBOR) jumped to the highest since the parallel currency was created (2013). This has broken the legs to the speculation that explained above, due to the high cost of borrowing on the interbank market, now less profitable.
As the crisis China remains the main issue of concern and though the new round of macroeconomic data released over the weekend has not shown signs of turning (the consumer price index recorded a further weakening to 1.6% on an annual basis) for investors today the prevailing attitude in the equity markets is to to buy.
The proof is from the fact that the sector which today earns more (automotive) is that last week had the second worst performance ever: the index Stoxx European auto components and has filed the first five sessions of the year with a 11.63 percent decline. This is also reflected in the Milan Stock Exchange with the positive performance of Fiat Chrysler Automobiles and CNH Industrial. Among the sectors most exposed to the Chinese market and who have suffered the news flow is then that of luxury. And it is no coincidence that, on a day-oriented “rebound” among the most award-winning titles there is to Salvatore Ferragamo.
Also positive mining and oil sector (here the trend of the main sector indices ) despite yet another wave of declines that hit oil. Today the prices of Brent and WTI still show heavy downturns analysts and insiders are wondering how much longer it will last the collapse. The estimate of Morgan Stanley is that crude oil could drop even to share $ 20. This because of the strong correlation there with the trend of the currency in which crude oil is listed, the dollar, which has appreciated a lot, and probably will continue to do so, because of the squeeze on US interest rates. According to experts of the US investment bank dollar appreciation of 5% corresponds to a fall of between 10 and 25% oil. So in addition to the context of macroeconomic fundamentals that does not help (the excess supply dictated by unscrupulous strategy of Saudi Arabia), there are other variables that affect heavily on oil prices.
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