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<Research>Daiwa: USD Strength Is Key Factor; Liquidity Expected to Support CN Stocks by Yr-end
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The weakening USD is more significant for emerging markets, A-shares and H-shares than a rate cut by the Fed, Daiwa published a research report saying. If the US economy achieves a 'soft landing,' it will be beneficial for emerging market stocks. Should the US economic data remain weak, the USD weakness may persist, increasing demand for foreign exchange hedging, which will drive liquidity and provide support to emerging markets and the Chinese market (including Hong Kong) by the end of 2025. Notably, since the 1990s, the Fed's rate cut cycles typically begin during US economic crises, during which the USD is often stronger, thus limiting the boost to stock markets (especially emerging markets, A-shares and H-shares). The strength of USD is the key indicator. Despite rising market volatility recently, Daiwa believed that the Fed's rate cuts and a weak USD will continue to provide liquidity support to emerging markets, A-shares and H-shares until the end of 2025. Compared to A-shares, the broker still preferred Hong Kong stocks, believing that they will benefit more from foreign capital inflows. AASTOCKS Financial News Website: www.aastocks.com |
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