Market volatility under US president Donald Trump and the rising appeal of yuan assets mean a boom for Standard Chartered Bank’s capital markets and trading business this year, according to a senior executive.
Trump’s inflationary policy plans and tariff rhetoric on China and other countries are moving the markets – altering bets on interest rates, foreign exchange and credit, said John Thang, the bank’s head of markets and strategic client management and solutions for Hong Kong and Greater China, as well as North Asia.
“The market has been fluctuating whenever Trump made a gesture or without saying anything, let alone if he said something,” Thang said.
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Standard Chartered, one of Hong Kong’s three note-issuing banks, has already seen increased demand for foreign-exchange management and hedging. The need for companies and financial institutions to manage risks will keep growing, Thang said.
Yuan-related risk management will be a significant topic for market participants, as the currency has been fluctuating, he added.
The onshore yuan has weakened by 1.98 per cent against the US dollar since the US presidential election in November, as China’s central bank continues to hold the line in the face of concerns over the country’s economic outlook in Trump’s second term.
Standard Chartered expects the currency pair’s exchange rate to be between 7.2 yuan and 7.4 yuan this year.
China would rely on monetary tools such as interest-rate cuts and fiscal policies such as issuing debt to solve its domestic problems while fending off Trump’s tariff threats, Thang said.
John Thang, head of markets and strategic client management and solutions at Standard Chartered, pictured on January 23, 2025. Photo: Aileen Chuang alt=John Thang, head of markets and strategic client management and solutions at Standard Chartered, pictured on January 23, 2025. Photo: Aileen Chuang>
“[China] will continue with such measures this year, and I don’t think [it] will drastically depreciate the yuan to deal with trade tariffs,” he said.
US and China bond yield spreads have tracked the currency pair’s movement, widening in the last few months and driving the yield for 10-year Chinese government bonds below 2 per cent. Bearish investor sentiment and the expectation of lower interest rates have continued to attract money into the China bond market.
