China FDI Improves as Bonds Rally on Weak Data

Market Snapshot

Asset	Level	Change
Shanghai Composite	3,876.78	+0.25%
CSI 300	4,728.00	+0.23%
Hang Seng	24,892.66	-0.95%
TAIEX	44,825.78	+1.34%
USD/CNY	6.77	+0.02%
USD/HKD	7.84	-0.01%
Copper	6.34	-1.76%
Brent Crude	100.55	+6.89%
Gold	4,052.30	-2.28%
Bitcoin	65,098.72	-1.52%
China 2Y Govt Yield	-	-
China 10Y Govt Yield	-	-

Prior Economic Events

Data	Prior	Cons	Actual
FDI (YTD) Year-over-Year	-8.60	-	-5

Today's Economic Events

Data	Prior	Cons	Time
No events available

China FDI YTD YoY improved to -5% from -8.6% in the latest reading.
Equities diverged with Shanghai Composite up 0.25% and TAIEX gaining 1.34%, while Hang Seng fell 0.95%.
HKMA recorded strong demand across multiple government bond tenders including 20-year, 10-year RMB and 3-year HKD issues.

Yesterday's Recap

China’s FDI data for the year to date showed a milder contraction of 5% year-over-year, narrowing from the prior 8.6% decline and signaling some stabilization in inbound investment flows. Mainland equities advanced modestly as the Shanghai Composite closed at 3,876.78 and the CSI 300 reached 4,728.00, supported by continued buying in sovereign bonds amid persistent economic softness. Hong Kong’s Hang Seng Index declined 0.95% to 24,892.66 as investors digested property-sector restrictions on offshore loan structures.

Taiwan’s TAIEX rose 1.34% to 44,825.78, buoyed by semiconductor demand. The PBoC fixed the USD/CNY reference rate at 6.7933, while USD/CNY spot edged 0.02% higher to 6.77. HKMA tenders for long-dated HKD and RMB bonds attracted robust bid-to-cover ratios, reflecting ample liquidity and investor appetite for duration.

Copper prices fell 1.76% to 6.34, consistent with subdued industrial activity signals from the mainland. Brent crude rose 6.89% to 100.55 while gold declined 2.28% to 4,052.30.

The Day Ahead

No major data releases are scheduled for mainland China, Hong Kong or Taiwan today, leaving markets to focus on incremental policy signals and external developments. Traders will monitor PBoC liquidity operations and any State Council commentary for hints of further easing measures. Hong Kong participants await updates on cross-border access initiatives with Malaysia that could expand capital flows.

Taiwan’s equity market may continue to track global semiconductor demand. Overall activity is expected to remain measured ahead of the weekend, with attention turning to next week’s potential Politburo meeting implications for growth support. USD/HKD held near 7.84.

Other Economic Notes

China’s sovereign bonds have rallied again as weak domestic demand and sliding equities revive expectations for additional monetary easing before the upcoming Politburo gathering. Authorities restricted real-estate firms from using a popular offshore loan structure, tightening financing options for distressed developers and reinforcing deleveraging priorities. Beijing also set a target to raise renewable-energy consumption 53% by 2030, aiming to convert intermittent wind and solar output into more reliable supply.

These measures coincide with ongoing imbalances highlighted in Q2 growth assessments, where domestic consumption remains a drag while external demand provides partial offset. <i>↓ p.2</i>

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Other Economic Notes (continued)

Property-sector curbs and renewable targets together illustrate the authorities’ dual focus on financial stability and long-term structural adjustment. The yuan’s growing role in Thai trade transactions was also noted by local banks.

Global Macro News

European policymakers have flagged the yuan’s valuation as a growing friction point in EU-China trade relations, with scrutiny likely to intensify around currency management transparency. The US Treasury again cited China’s relative lack of disclosure on FX operations in its semiannual report, keeping bilateral tensions elevated. Hong Kong and Malaysia agreed to expand cross-market access to deepen capital flows.

Brent crude surged on geopolitical supply concerns while gold declined amid shifting risk sentiment. Broader AI-related growth worries in the US carry indirect implications for Greater China through technology export controls and capital expenditure cycles. These external factors overlay a domestic environment already marked by subdued momentum and selective policy support.

Greater China Central Banks Watch

The PBoC maintained its daily USD/CNY fixing at 6.7933, providing a stable anchor while liquidity operations continue to support interbank conditions ahead of potential further easing. No MLF or LPR decisions were announced, though market participants anticipate additional RRR or rate adjustments if Politburo guidance signals weaker growth. HKMA conducted multiple successful tenders for 20-year HKD, 10-year RMB and 3-year HKD government bonds, all posting strong bid-to-cover ratios that confirm ample demand and the credibility of the currency peg at 7.84.

The authority also issued routine warnings on bank scams and updated coin-cart schedules, underscoring its focus on financial-system resilience. Taiwan’s CBC has not signaled near-term rate changes, with semiconductor export performance remaining the key variable for any future policy calibration. Cross-strait trade flows and external risks will likely keep the central bank attentive to FX volatility.

Overall, the three central banks maintain a steady posture with HKMA demonstrating clear market access and the PBoC preserving room for incremental stimulus.

Greater China Macro Daily(Beta Mode)