Chinese Yuan

Creemos que Pekín considera estas acciones comerciales de Estados Unidos como nada menos que una declaración de guerra económica, no solo una disputa comercial. La confrontación entre Estados Unidos y China está a punto de intensificarse. Las autoridades chinas permitirán que el yuan se deprecie de manera significativa. Abrir una posición corta en CNH frente al dólar estadounidense. Para las carteras de renta variable EM y asiáticas, estamos rebajando las acciones chinas investibles/offshore de neutral a infraponderadas.

This report looks at the FX implications of the Trump tariffs, and the review of our Q1 trades.

The tariffs on Canada and Mexico will come into effect as scheduled while the tariffs on China will be doubled. In the Middle East, Iranian response to any attack will threaten Middle Eastern oil supply. Meanwhile, Chinese fiscal support will surprise to the upside at the Two Sessions. But Trump's China policy will cause volatility. Now that the stock market is cracking, reinitiate defensive trades, such as long treasuries versus US stocks and long global defensives versus cyclicals.

Is the RMB cheap or expensive? Based on trade accounts, the yuan is inexpensive, but the RMB is vulnerable due to capital outflows. Yet, Beijing will not resort to a rapid devaluation for now, and the option of floating the currency is improbable. The PBoC will allow a gradual depreciation of the yuan versus the dollar, say around 5%, in the next six months.