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The one unanimous conclusion they came to was that Beijing wants a greater state presence in these sectors. Kroeber says the crackdowns are about "defining what the state does, what the private sector does, and creating a more limited sandbox for the private sector to play in." That has left investors now picking the state over the private sector. The CCP's July Politburo meeting reinforced the message, with the top policymaking body pledging to put a floor under the property sector, help indebted local governments heal and boost consumer demand. Huang Yan, general manager of private fund manager Shanghai QiuYang Capital Co, said Beijing will crack down on any sector seen as increasing people's economic burden.
Persons: Aly, Jack, Arthur Kroeber, Kroeber, Zhang Kexing, Xi Jinping, Mao Zedong's, Thomas Masi, Masi, Xi, Nuno Fernandes, Fernandes, Huang Yan, Huang, Kumar Pandit, Pandit, Jason Xue, Ankur Banerjee, Vidya Ranganathan, Sam Holmes Organizations: REUTERS, Rights, Ant Group, CSI Medical Services, Beijing Tongrentang, HK, Poly, Beijing Gelei Asset Management, Communist Party's, Investors, Mao Zedong's Marxist, Boston, K Investment Management, Shanghai QiuYang, Somerset Capital, Thomson Locations: Shanghai, China, Rights SHANGHAI, HONGKONG, Beijing, New York, London, Singapore
"This mix is generally a net negative for emerging markets." A recent Barclays analysis showed a 50 basis point Fed rate hike would increase interest rate volatility, which "would be more destabilizing initially, as it typically comes with EM FX underperformance, which could trigger a further leg up in EM rates." Analysts at JPMorgan expect the dollar to weaken once the terminal rate stabilizes, but a 50-basis point Fed hike "would be a regime-shift in favor of outsized USD-strength." A 6% Fed rate environment alongside still-hot inflation does make short-term rates in Chile and India as well as Poland, the Czech Republic and Hungary most vulnerable, UBS found. Chinese equities could provide a safe haven in a 6% fed funds rate scenario, UBS said.
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