Positive Sentiment

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Following on from previous issues pointing out the recent rise in China’s investment markets (see Buy China?Free FlowInvesting in China and Mega Trend), the FT reports that “the onshore-traded renminbi has strengthened 8.4% against the greenback since the start of June to RMB6.585. The currency is up more than 5.7% in 2020. China’s onshore markets have sucked in tens of billions of dollars worth of foreign investment this year as stocks have rallied on the back of its economic recovery, ensuring strong demand for the renminbi needed to snap up shares in Shanghai and Shenzhen”.

As can be seen from the chart below, this is a major turnaround for China bearing in mind the negative sentiment that existed at the start of 2020 with the Covid-19 outbreak in Wuhan. There has also been negative pressure on the US dollar which has also contributed to the rise in China’s RMB/USD exchange rate.

Whatever you think about China, it’s hard to ignore the positive sentiment emerging from a large ‘Covid free’ country, a growing economy, rising investment markets and a Government with a long term plan to stimulate consumption, innovation and investment in world class infrastructure.

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