Equities, FX Looking Rosy, But CDS The Missing Link

Asian financial markets have finished on a strong footing this week, with both equities and FX recouping late October's losses. For example, the chart below shows China's Shanghai Composite Index, which has busted through its three-month uptrend at 3,160. While the weak close failed to confirm the break, in our view - and the bourse is likely to remain volatile on expectations of less accommodative monetary and fiscal policies going forward - a hold above this level next week would be a bullish signal of further short-term gains.

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