Multilingual AI-driven EM Outlook
Synopsis:
With the prospect of a global trade war, fears of a coming recession in the US and a spike in market volatility everywhere, local investor sentiment for China has been resilient amid all the global uncertainty. In the chart below, EMAlpha’s Macro Monitor, which uses proprietary multilingual AI to detect local language market sentiment in global newsflow, in collaboration with our partners at Kleiman International, looks at the YTD progression of a range of macro and risk themes in the Chinese media.
Fig. 1: China Macro Theme Sentiment Scores: EMAlpha’s Multilingual AI inspected local Chinese news and used Chinese language sentiment analysis to detect sentiment scores for various macro themes. The scores are normalized such that +1.00 signifies extreme optimism and -1.00 signifies extreme pessimism.
The following are some of the key indicators in the second week of March (note the contrast between the generally positive macro themes and negative Trade Tariff sentiment):
- Stock Market: Despite global trade tensions and market volatility, China’s stock market has been performing well. The MSCI China Index has soared by 20% and Hong Kong-listed tech stocks are up by nearly 30%. Local language sentiment for our China Stock Market Macro Theme has been solidly in positive territory most of this year (see Fig. 1) as China counters the Trump trade tariffs with fiscal stimulus for the economy.
- Economy: Local sentiment for our China Economy Macro Theme has been especially positive, dipping in early February but currently near the top end of the sentiment scoring band (0.75) that ranges from +1 (most positive) to -1 (most negative). At the annual meeting of China’s parliament last week, officials promised more fiscal stimulus, a wider budget deficit and greater efforts to support domestic consumption. They also re-affirmed their commitment to hitting their 5% GDP growth target and, as a result, international institutions have been raising their growth forecasts for China.
- Banks: Multilingual AI sentiment for our China Banks Macro Theme has also improved markedly and has been rising since Chinese officials announced plans last week to re-capitalize major state banks. It is quite a departure from the deeply negative sentiment for the banking sector in recent years, which has been weighed down by bad loans to the property market.
- Policy Change: The China Policy Change Macro Theme has spiked to the upper level of the band as intermittent new policy announcements are made supportive of economic growth. Tracking this theme indicates, in Chinese language content and in real time, when a potentially market moving policy shift has been announced.
- Trade Tariffs: Local sentiment regarding our China Trade Tariffs Macro Theme is unsurprisingly languishing in the current environment as the US imposes tariffs on a range of Chinese goods, forcing China to retaliate with its own tariffs on not just US goods but also on other trading partners that are moving to protect their domestic industries with tariffs of their own.
Half of the world’s web-based content is in languages other than English. Learn more about using EMAlpha’s multilingual AI to identify investable signals in local language content.
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