3 reasons Nomura remain bearish and short on the Chinese yuan

Nomura analysts are wary of the jump in positive sentiment following the recently announced supportive measures for the Chinese property sector, including plans to buy back unsold homes:

• China plans to buy ‘millions of unsold homes’

They outline concerns that:

• it may take several months for Beijing to lay the groundwork to significantly support the property sector, investors may well lose patience
• even if local positive sentiment persists and a softer USD emerges in the near term, state banks and local corporates could still accumulate USD, which would limit any potential downside in USD/yuan (related: China’s capital outflow surges to its highest since 2016)
• simmering U.S.-China trade tensions, which could well heat up ahead of the U.S. election

CNH is offshore yuan.

This article was written by Eamonn Sheridan at www.forexlive.com.