The rise in COVID cases in China has prompted renewed lockdowns in the country, and other restrictions. It looks like the China coronavirus ‘pivot’ is yet to happen. China is heading into winter, a high-risk season, any pivot may have to wait until after this.

In addition, China officially reported its first Covid-related deaths since the Shanghai lockdown. This, of course, strains credulity. No one, no one at all, believes that there have been no virus-related deaths since Shanghai. Its difficult to believe anything but the worst when officials in China feed out such blatant lies.

In the region stock markets wobbled on the news. The Hang Seng index in Hong Kong fell more than 2.5%. Mainland China saw the Shanghai Composite and Shenzhen both off just over 1%. Japan’s Nikkei is not a lot net changed.

Across major forex rates, the move was into US dollars. EUR, AUD, GBP, NZD, CAD all fell against the USD. USD/JPY was fairly stable though.

In central bank news the People’s Bank of China set the one- and five-year loan prime rates (LPR) unchanged for the third straight month. As expected, given that last week the PBOC partially rolled over maturing medium-term facility loans (MLF) at an unchanged interest rate. The MLF rate is used as a guide to the LPR rate setting:

  • the one-year loan prime rate (LPR) was kept at 3.65%
  • the five-year LPR at 4.30%

From South Korea today we had trade data for the first 20 days of the month. In another sign of woes in the Chinese economy exports from SK to China slumped more than 28% y/y.

Bitcoin slid back just under US$16K. Sentiment in the crypto complex has suffered after the FTX implosion.

China LPRs (graph via Bloomberg):

Chinese Banks Maintain Lending Rates