The People’s Bank of China (PBoC) announced on Friday that it would suspend its bond purchases on the open market due to a “shortage of supply.” This move comes after a sharp drop in Chinese government bond yields since last year, which raised concerns about the health of the Chinese economy. The central bank’s suspension, effective until an “appropriate time,” follows the purchase of RMB 1 trillion in government bonds since August.
As a result, Chinese bond yields rose, with the 10-year yield increasing by 0.03 percentage points to 1.65%, and the 2-year yield climbing 0.05 percentage points to 1.2%. This decision from the PBoC is likely to add to concerns about China’s economic recovery and the challenges facing the world’s second-largest economy.
Global Markets: Decline in Asian Stocks as Strong Dollar Weighs on Emerging Markets
Asian stock markets experienced a decline in early trading on Friday. The MSCI Emerging Markets stock index dropped more than 10% from its October high, entering correction territory. This downturn was driven by rising US bond yields and a stronger US dollar, which have dampened investor demand for emerging market equities.
Key Chinese and Indian stocks, which hold the largest weightings in the index, have performed poorly this year, further dragging down the overall index. In Japan, shares of Fast Retailing, the owner of Uniqlo, fell by 7% after disappointing sales figures from China, where the company is scaling back expansion due to sluggish demand from the middle class.
Other Key Updates:
Ubisoft Delays Assassin’s Creed Game: Ubisoft delayed the release of Assassin’s Creed Shadows to March 20, 2025, and appointed advisers to explore “transformational” business options after a weaker-than-expected holiday sales period. The company’s shares fell 17% following the announcement.
BlackRock Exits Climate Group: BlackRock, the world’s largest asset manager, left the Net Zero Asset Managers (NZAM) group, citing confusion about its practices and legal inquiries from public officials. This move follows pressure on financial institutions related to climate change commitments.
Venezuela’s Opposition Leader Arrested: Venezuelan opposition leader María Corina Machado was briefly detained by government forces while leaving an anti-Maduro protest in Caracas. Her arrest occurred as President Nicolás Maduro prepared for his third-term swearing-in.
Emerging Markets Stock Index in Correction: The MSCI Emerging Markets index dropped by 0.4% on Thursday, falling into correction territory, as concerns over US trade policies and weak Chinese economic data weighed on investor sentiment.
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