正文
Figure 2: Global economic cycle is plunging into a deceleration phase
Source: Bloomberg, BOCOM Int’l
In sum, the Ukraine war will continue to unravel and pile on uncertainties, at a juncture when the US cycle is decelerating rapidly while China’s cycle is stuck at its trough. The implied China market volatility is elevated, but at levels well below previous crisis episodes. As such, traders may have plunged back into the market too soon last Friday, and pressure on China’s markets will persist.
The war will mean higher oil and commodity prices, and thus higher inflation pressure will give little excuse for the Fed not to tighten according to plan. A strong yuan suggests that the PBoC may not be easing aggressively as hoped, leaving leeway for monetary insurance should the uncertainties from the war spill over. The “Two Sessions” will likely set the growth target at 5%, not deviating from consensus.
The war is one of the many manifestations of the end of the cycle. As we have repeatedly warned recently, this juncture is particularly volatile and not yet conducive to risk taking. Historic events tend to occur at the final phase of cycles, especially with the confluences between the US and Chinese economies. At the time when we sounded our warnings of impending risks, the gunshots of the Ukraine war had not been fired (
“What the Tiger Year Means for Chinese Stocks”
, 2022-02-07). The narrow difference between audacity and rashness is patience. As the “Two Sessions” start, we will have a better compass to navigate the troubled waters.
欲下载报告全文PDF，请点击页底左下方“
阅读原文
”，或按下方
所附二维码下载我们报告PDF完整版
:
