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Signs of activity and a preference for Asian assets as USD loses value

Signs of activity and a preference for Asian assets as USD loses value

Last Updated: ‎‎‎‎‏‏‎ ‎
January 24, 2023

This week’s update is co-authored with Novia Raihanah (our Head of Data Operations)

Investors are waking up

Two week ago, we had put out a chart which proved very popular with our readers. It showed how investor activity has changed with each retracement this year in the stock market.

That chart has been updated for fresh data (see below). We see some encouraging signs of activity. Investors seem to be awake (or at least getting up and stretching!!)

Source: Canopy Data and Analytics

Asian currencies have gained against USD

Since the end of March, USD has slowly been losing value against some of the Asian currencies (see below). One currency in particular, has shown the most advance against the dollar. With a near one percent rally this week, Renminbi has surged past critical levels that have held since 2018, and is expected to further strengthen.

Source: Bloomberg

Resulting in preference for Asian assets

With investors selling off their US Dollar assets in recent weeks, we are seeing a concurrent rise of interest in Asian assets.

The Renminbi rally is presenting itself in the chart below, with the majority of the buys being in Chinese Yuan. Hong Kong Dollars soon followed suit, with some Korean Won (in orange) and Singapore Dollars (in red) thrown in the mix.

Though the Japanese yen is weakening against the dollar, there is still a slight rise in buying volume for its securities (in yellow).

Source: Canopy Data and Analytics

Conclusion (tl;dr)

  • Investors are showing signs of awakening
  • With US Dollar losing value, investors are selling off some of their USD-denominated assets, and are showing interest in Asian assets instead
  • Chinese Yuan assets are leading the pack in buys (buoyed by the Renminbi rally)

Please note that this newsletter is just a data analysis of actual investor behaviour and does not constitute investment advice in any form.