Long Japan, short China.
If there is a general macro, relative value trade playing out right now, it might be that as the contrasting fortunes of Asia's economic and financial behemoths become starker by the day.
First up, Chinese investment and retail sales in April fell short of economists' forecasts, industrial production growth was barely half what economists had predicted, and foreign direct investment growth was less than half of that in March. Analysts at Societe Generale on Wednesday revised their outlook on the yuan, and now see it falling to 7.30 per dollar this year - a level flirting with 15-year lows.Official figures from Japan on Wednesday, meanwhile, showed that Asia's second-largest economy grew in the first quarter four times faster than expected on a quarterly basis at 0.4%, and more than twice as fast on an annualized measure at 1.6%.
But that burst of optimism surrounding the post-COVID reopening has evaporated. Non-residents sold nearly $4 billion of Chinese stocks in April, according to the Institute of International Finance, the first outflow in six months.
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