Morning Brief – China: the great leap forward

Humphrey Percy
Chairman and Founder
Wed 7 Feb 2024

China: the great leap forward

On reports of the Chinese government’s president Xi arranging talks with the regulators and an imminent policy adjustment to offer relief to the beleaguered Chinese equity market, Chinese equities had their best session for 14 months yesterday.
USD/CNY 7.1880.


Meanwhile the Reserve Bank of Australia held rates steady-no surprise- as inflation continues to abate in Australia but was more surprising to a market looking for indications on timing for interest rate cuts, was the accompanying statement that inflation in the Australian economy was still too high and therefore that a further increase in interest rates could not be ruled out. Hardly in keeping with the global market view of the path of interest rate declines.
USD/AUD 1.5395.

US Treasury Bonds

With 2 Years now yielding 4.45% and 10 years 4.15% the US Government Bond market is paying investors for their faith in the US government while at the same time making it clear that Chair Powell of the Federal Reserve will not be bounced into cutting interest rates prematurely to suit the Presidential aspirations of the two main candidates.
EUR/USD 1.0740.


Newly re-appointed to the post Budget 2024 NatWest Share Offer, M&C Saatchi will need all of their fabled marketing skills to get the remains of the UK Government’s GBP 45 billion stake which is now down to 37% off the books of UK Government Investments. Apart from the overhang of that stake, the fact remains that on a price to book basis NatWest like Barclays for example is out of favour: at present NatWest trades on a 0.56 price to book ratio ie a discount of 44% from the perceived value of the bank on a net asset basis. Perversely that should make the shares a raging buy, but it will take a further discount to get the mythical retail investor excited about this one. However despite the caveats, if one believes that the UK economy will prosper under a fresh new Labour government led by Sir Keir and Rachel Reeves in 2025, the marked down NatWest share offer when part of an ISA portfolio represents one to tuck away. If all else fails you can always use the shares as novelty wallpaper if you are contemplating some DIY.
GBP/USD 1.2540.

Never, Never Gonna Give Ya Up

It was of course Barry White and it was this day in 1974 that Barry White was awarded a gold disc for this gem and three other golds that year for other songs and an album: the shadow cast by Barry White in 1974 was huge.

Baby, baby, baby, baby
Oh baby
Oh baby (keep on)
My baby (keep on doing it)

(Right on) mm-mm-mm
(Right on doin’ it)
You got it together (baby, keep on)
Oh, you got it together baby (right on)
(Keep on doing it) gotta get it baby, oh, gotta get it

Mm-hmm (my, my, baby, keep on)
I swear you got it together baby (keep on, keep on)
Whatever, whatever
Girl, I’ll do it
Forever and ever, yeah, yeah, yeah, yeah
I’ll see you through it

I’ve got to keep you pleased in every way I can
Gonna give you all of me as much as you can stand
Make love to you right now, that’s all I want to do
I know you need it, girl, and you know I need it, too

‘Cause I found what the world is searching for
Here, right here, my dear
I don’t have to look no more
And all my days
I’ve hoped and I’ve prayed
For someone just like you
Make me feel the way you do…

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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