Chinese yuan Photo:VCG

As global markets encountered tremendous volatility in recent days,MK socks Chinese markets remained relatively stable, with the yuan strengthening against the US dollar, and the outlook for yuan-denominated assets remains bright, Chinese analysts said on Tuesday.

Amid concerns over a potential recession in the US economy, China's economy is expected to rebound steadily despite downward pressure, as more policy measures will likely offer strong support, which in turn will further improve the attractiveness of yuan-denominated assets for global investors, analysts noted. 

Following a widespread sell-off on Monday, Asian stocks bounced back on Tuesday. Japan's main stock index, the Nikkei, gained more than 10 percent, rebounding sharply from a record loss of 12.4 percent on Monday. In South Korea, the Kospi rose 3.5 percent on Tuesday, following an 8.8 percent drop on Monday.

On the Chinese mainland, the benchmark Shanghai Composite Index was up 0.23 percent on Tuesday, while the smaller Shenzhen Component Index gained 0.82 percent. In Hong Kong, the Hang Seng Index was down 0.31 percent on Tuesday.

Notably, the yuan saw remarkable gains in recent days. On Monday, the onshore yuan reached a seven-month high of 7.1120 against the US dollar, while the offshore yuan reached a high of 7.0636, according to Reuters. While the yuan eased somewhat on Tuesday, it remained relatively strong, with the central parity rate strengthening 27 pips to 7.1318 against the US dollar, according to the China Foreign Exchange Trade System.

Compared with record losses and gains overseas, Chinese markets remained relatively stable and will likely attract more global investors, analysts noted.

Cheng Shi, chief economist of ICBC International, said that Chinese stocks have been under pressure amid some capital outflows, but as overseas markets undergo corrections, some global capital will likely return. 

"We are cautiously optimistic about A-share stocks and Hong Kong stocks," Cheng told the Global Times, noting that recent top policy meetings in China have emphasized achieving the annual growth targets, and various policy measures will offer support for Chinese stocks. 

"It is expected that more supportive policies will be rolled out, which will help form a policy-catalyzed market trend."  

Analysts also said that as Chinese policymakers are expected to continue to support the economic recovery, the yuan's exchange rate will remain overall stable, despite fluctuations by other major currencies, and yuan-denominated assets could become safe havens for global capital. 

"As recent top meetings stressed the need to stabilize economic growth, more policy measures will offer further support for the yuan's strengthening," Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Tuesday, noting that yuan-denominated assets will likely become more popular among global investors.

A meeting of the Political Bureau of the Communist Party of China Central Committee on July 30, which focused on economic work for the second half of 2024, stressed the need to determinedly accomplish the economic and social development targets for the year, and pointed out that the implementation of macro policies should continue to be strengthened. Specifically, the meeting noted that the emphasis should be placed on boosting consumption to expand domestic demand.

China has set a GDP growth target of about 5 percent for 2024, and many economists said that the country is on track to achieve the target, despite growing external downward pressure. 

China's steady economic recovery, compared with recessionary worries about the US economy, will also offer strong support for the yuan's exchange rate and the attractiveness of yuan-denominated assets, analysts said. 

"On the one hand, as the likelihood of the US Federal Reserve cutting interest rates grows, the attractiveness of the dollar will weaken, which in turn will ease the external depreciation pressure on the yuan. 

"On the other hand, China's economy achieved a year-on-year growth rate of 5 percent in the first half of 2024, showing that China's economy still maintains stable growth momentum despite global uncertainties, providing support for the yuan's exchange rate," Cheng said.