BUZZ-COMMENT-Blinders on, investors bet on China stocks and the yuan

Credit: REUTERS/© David Gray / Reuters

China's yuan has been resilient to stock market turbulence and geopolitical sabre-rattling [nL2N2EO040]. Now, it looks set to rally and potentially recover all this year's losses, thanks to seemingly irrepressible equities and Beijing's market-friendly policies.

July 21 (Reuters) - China's yuan has been resilient to stock market turbulence and geopolitical sabre-rattling . Now, it looks set to rally and potentially recover all this year's losses, thanks to seemingly irrepressible equities and Beijing's market-friendly policies.

Recent USD/CNH rallies have repeatedly been rejected by the ceiling of the daily Bollinger downtrend channel - now at 6.9920. If the Fibonacci support at 6.9800 is breached Tuesday, the next target is the channel's base currently at 6.9540.

Excitement is building ahead of Ant Group's dual listing in Shanghai and Hong Kong, in what is slated to be the biggest initial public offering of 2020 . Another Chinese unicorn also at the starting gates is JD Digits, the financial arm of e-commerce behemoth JD.com.

Meanwhile, there's a growing wall of money looking to invest. China's mutual fund industry in June witnessed its biggest monthly jump in new funds and inflows since 2015 . Near-zero interest rates and floods of stimulus from global central banks are inevitably pushing investors toward riskier emerging markets.

Chinese regulators stoked the flames late last week by raising equity investment caps for insurers and encouraging mergers and acquisitions among brokerages . Beijing's pro-investment stance could well be enough for many investors to overlook parallels to China's 2015 market crash and buy stocks and the yuan.

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(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

((ewen.chew@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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