By Ye Xie, Bloomberg Markets Live commentator and reporter

For a while, it was a popular narrative: Chinese stocks would outperform those in the US and other advanced economies. The thesis was simple. China needs to ease financial conditions, via a stronger equity market and weaker currency, to engineer an economic recovery, whereas the US and Europe are doing the opposite to cool inflation at the risk of a recession.

It was a great trade in June following Shanghai’s reopening from lockdown, but since then it has given up all the profit. That shows that China’s efforts to reflate the economy are facing considerable constraints.

US House Speaker Nancy Pelosi’s visit to Taiwan has left few scars in financial markets so far. Japan reported Thursday that China likely fired missiles over Taiwan during military drills for the first time, but markets have largely stayed quiet. Without dramatic escalation in coming days, geopolitical risks may give way to central bank policies

Keep reading this article on Zero Hedge - Blog.

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