May Net settlement created fresh hot money this year showed signs of returning to China
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The latest report from the central bank revealed that net settlement in the banking system rose markedly in May this year and has reached its highest level since this year. The bank's credit balance sheet, issued by the central bank, shows that in May this year, the banking system occupied RMB 242.565 billion yuan for net purchases of foreign exchange, equivalent to a net purchase of about 35.5 billion dollars in foreign exchange. This is the first time this year, the data has exceeded 200 billion yuan. In the first 4 months, the average value of this data is only about 140 billion yuan. Before the full outbreak of the financial crisis in 2008, the average monthly value of the data was nearly 400 billion yuan. "This increase is rapid, but the May foreign trade surplus and FDI (foreign direct investment) are in a downward trend, indicating that the increase comes from capital." Yang Hui's, a macro analyst at Citic Securities, said that in recent months there have been signs of stabilisation in China's economy, a marked rise in risk appetite for global capital, and an increase in capital inflows to both Hong Kong and the mainland. As the financial crisis raged, there were some signs of capital outflows in the US and Western countries as a result of deleveraging, and investors opting to hedge against the dollar. Recently, the foreign exchange market, regardless of spot or forward trading, there has been a significant increase in turnover, traders also believe that China's foreign trade situation is a certain improvement. But for May, there was a big increase in foreign exchange accounts, which the people said could not be interpreted merely as a resurgence of capital inflows. Yu Jianguo, a macro analyst with Haitong Securities, said since this year, China's foreign exchange policy has changed a lot, and the United States dollar, the euro and other currencies exchange rate changes frequently, perhaps under the role of common factors, foreign exchange accounted for a rebound, "still cannot conclude that China's foreign exchange reserves will increase, but also to continue to observe." Notably, Citi's new study, released in Monday, cites Epfrglobal data from the 215 billion dollar Offshore Asia fund, which last week had a total of $1.2 billion trillion in emerging market-related funds, but a sharp drop from the average of $3.2 billion a week between April 30 and June 10 At the same time, global equity funds received a second week of new funding of $1 billion trillion, in contrast to the decline in capital inflows from emerging market funds. With the four-week moving average, funds flowing into global equity funds are accelerating. In addition, the Greater China fund suffered its first net redemption in 12 weeks. Interest in Asian exchange-traded funds (ETFs) also declined, from the peak of May to 64% of the total weekly inflow, down to the current 30% per cent.
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