Chinese stock market and Chinese currency

The Chinese stock market seems to enter bear market territory as the benchmark Shanghai Composite index was 20% lower than its peak in January after Tuesday's market close. Meanwhile, the Chinese currency, Renminbi, depreciates beyond the lowest level against dollar since last December. However, although the market seems against the Chinese economy, the Chinese economy is actually performing well that profits at China's large industrial companies jumped over 20%. According to the National Bureau of Statistics, Chinese industrial profits rose 21.1% year on year in May. Profits of ferrous metals producers rose 44.6%. The performances of the Chinese stock market and the Chinese economy are contradicting against each other. It shows the sign of lack of the global financial market's confidence in the Chinese economy, which is also implied by the weakening Chinese currency.

The problem here is that the global financial market has some different views on the Chinese economy and such disagreement becomes even stronger since the US president Trump declared a trade war on China. Then there is a possibility of existing overreaction or mis-estimation (mis-calculation) over here, providing a good opportunity for speculators.