China
A surge in UK employees on long-term sick leave or with a work limiting health condition explains stubbornly high UK wage inflation. This leaves the Bank of England and the UK government with some tough choices to make in the months ahead. Plus, a new tactical trade is short CSI 300.
Our newly constructed China Economic Pressure Indicator shows intensifying household stress, raising the likelihood of new policy support in the coming months. We recommend a tactical trade as a stimulus hedge.
Chinese stock prices have significantly decoupled from the country’s business cycle, with the full impact of US tariffs yet to be realized. The valuation-driven equity gains without a cyclical economic recovery will be vulnerable to a reversal.
Investors often ask us which industries the Chinese government is prioritizing for expansion. The assumption is that investing in sectors hand-picked authorities will produce solid investment returns. Yet, this assumption has not held over the past decade.
