China’s benchmark index rebounded from earlier jitters as investors saw more rate hikes in the near term as suggested by People’s Bank of China policy officials in recent days. However, bouncing back, the CSI 300 benchmark was able to close higher by 50.62 points at 3,928.21 into the end of the session as investors, already experienced to massive volatility, swooped into find bargain deals. Aside from showing further support for equity bids, the intraday turnaround in the index shows that risk aversion still has a ways to go as far as materializing. As a result, carry trades and riskier investing will likely continue throughout the quarter, supportive of a stronger yuan.



Singapore Industrial Production Accelerates
Industrial production in the Singapore economy expanded more than expected by 17.7 percent on the annualized comparison. The previous month’s gain was subsequently revised higher to 19.6 percent according to the Economic Development Board. Once again, increased drug production helped to boost the overall figure along with new orders for ship and oil rig builders. However, weaker demand continues to plague the electronics sector, lending to restraint of a higher survey result and bullish Sing dollar support. As a result, traders took the Singapore dollar back against the US dollar, falling to 1.5377.

Hong Kong Export Growth Slows In May
Surprising the market, Hong Kong’s export sector grew at a slower pace than expected in the month of May according to government reports. Shipments to the US dropped with sales shipped overseas only rising 12.1 percent compared to a 12.6 percent rise in the month of April. Although the figure was only slightly lower than the previous report, the decline supported speculation of slower consumer spending in the world’s largest economy. For the record, exports to the US dropped 2.5 percent on the annualized figure. However, the overall number was well supported as business picked up with counterparts in China. Trade with the world’s fastest growing economy grew by an impressive 16.7 percent, helping to mitigate what would have been a rather slow month. Nonetheless, market investors continued to remain somewhat cautious over the strength in the Hong Kong economy, helping to take the HKD back a bit against the dollar and rising to 7.8132 in the overnight.

China Puts Pressure On Banks, Hopes To Restrict Loan Speculation
In a move similar to earlier charges brought against several higher profile domestic banks, government officials are putting the heat on institutions lending “hot money” in the markets. Recent stock market fluctuations have sparked wider range investigations in the lending practices as speculators continue to ramp up markets in China. Already, local regulators have dealt punishment to 19 local and 10 foreign banks involved in such schemes.

Richard Lee is a Currency Strategist at FXCM.