KGI Research Singapore

Singapore's leading broker offering Futures, FX, Equities and Wealth Management.

In the Spotlight: China and US Financial Condition Index

16 March 2021

Source: KGI Research, Bloomberg

  • The Financial Condition Index measures the loosening or tightening levels of monetary conditions.
  • The recent rise of the China financial condition index indicates the resumption of tightening monetary policies.
  • With the COVID-19 pandemic largely contained, the Chinese government is growing concerned of overheated money flows into the equity and real estate markets. 
  • At the moment, more deleveraging measures have been signaled by the Chinese authorities to stabilize economic recovery.
  • A flattish, low-level US financial condition index indicates prevailing abundant liquidity in the US.
  • In the next couple of months, the US plans to launch an unprecedented fiscal expansion. Hence, a prolonged loosening monetary condition is expected to remain.