🧯PPI data show hope🎁

The latest PPI data shows weaker input cost for producer and investors are hoping for weaker inflation ahead. Core PPI took out energy and food prices which are volatile, and it is moderating. Market participants appear to see that it could signal that inflation is perhaps peaking and an inflection point is arriving. 

This is sufficient to send major indices to jump higher. Pika World will be looking at CPI data for further confirmation that inflation is indeed waning and has reached its peak before further accumulation for long term holdings. 

🛎Chinese stocks get cheaper📉

After the release of our weekend edition on Chinese stocks, we have seen further downward pressure on Chinese equities. There is growing concern that China could be pulled into Russia’s war when more cities in China are facing lockdown as Covid-19 infection rose sharply. 

Then came the ultimate bomb as Tencent Holdings may be hit with a record fine. This causes regulatory concerns to the surface and is sufficient to evoke a widespread sell-off. 

🧸Political risk🗽

China is in a dilemma. While it is trying to publicly support Russia by refusing to call Russia’s action an invasion, it has to tread carefully with western powers to avoid sanctions hitting its shore. Hence the risks are multi-fold from geopolitical to economic and regulatory pressure for Chinese counters. 

Although China may throw in some life support for Russia’s economy by maintaining its trade tiles on oil, gas, coal and metals, it is expected to be cautious of fostering a closer relationship. After all, its ties with Europe is particularly of great economic importance. 

🧨Chinese stocks on decline trend⛳️

Most of the counters had already been falling for the past 13 months, and the near-term bounce is still not as visible as the end of the Chinese regulatory crackdown does not appear to end anytime soon. Moreover, investors looking at the recent Tencent case is worried about the anti-money laundering violation of the WeChat mobile network. 

With firmer Covid restrictions and the lockdown of critical ports and manufacturing hubs, the economic cost to tame down infection is mounting. This is bad news for Chinese small businesses, which will already be hit by weaker travel and consumer spending during the CNY season. 

With the Chinese economic situation souring, after Feb data showed a weak credit growth and a shrinkage in household loans, a chilling effect is indeed happening on the economy that goes beyond the slump in property activities. 

As usual, Pika World is taking a cautious stance on the trading and investment environment as our portfolio is badly hurt in this downturn.