GROW Research: The Puzzle of “Vanishing Surplus”

GROW Research - 2023-2-20?Hao Hong 洪灝, CFA

• FX settlement growth at record low, trade surplus has not yet been converted to yuan liquidity fully but will likely so. It explains the disconnect between record surplus and plunging stocks in 2022.
• The yuan vol and traders’ USD positions are not sending out strong trading signals, while northbound buying has hit a near-term wall. Bide your time, while waiting for the recovery to unfold.?

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