Helen Lee’s Post

In their latest article, the Bond Vigilantes are looking into China's economic strategy for 2024. William Xin describes China's policy measures aimed at stabilising the capital market and bolstering economic growth amid prevailing challenges. Discover the strategic interplay of fiscal and monetary policies shaping China's economic trajectory for 2024 and the implications for investors in the fixed-income space. Read the full blog here: https://ow.ly/n77i50QQn9H #china #fixedincome #bondvigilantes

China's leadership is showing real pessimism on the Chinese economy -- judging from today's People's Daily frontpage top story, which is on China's 9/26 Politburo meeting. Take-away: China is doubling-down on government intervention to halt market's pessimistic outlook. That includes renewed emphasis on fiscal stimulus, loosening monetary policy, and lifting various restrictive policy hurdles to investment, all in an attempt to salvage China's market confidence. 5 points that stand out from the Politburo meeting's readout: 1. Fiscal stimulus: "Strengthen degree of counter-cyclical fiscal and monetary policy adjustments. ENSURE necessary fiscal expenditures (get made)" Sidebar: - What are "3 guarantees"? Guarantee that people get basic livelihood, get salaries paid, and that offices stay open.  So let's do a verbal logic exercise: When the central government is announcing major fiscal stimulus for the explicit objective of ensuring these, it shows that it feels at this current rate, there is real systemic risks of lights going dark at the local level, if the center doesn't provide assistance asap. 2. Banks: "Implement forceful lowering of reserve requirements and of interest rates" Ok, so it's to lower the cost of borrowing to make Chinese businesses feel more confident about borrowing & investing. Which is fair, it's what US govt does just before presidential elections, too... (#KamalaBump) 3. Housing: "Must respond to people's concerns, 'adjust house purchase restriction policies, and lower interest rates for mortgages." Yes. So Politburo is acknowledging that its restrictive housing policy over the last decade wasn't quite "responding to people's concerns", and that it's, if not wrong-headed and myopic, at least in need of major "rolling updates". 4. Capital markets: "Must reinvigorate capital markets. #Boldly infuse medium-to-long term capital into the market by removing the barriers to entry for social insurance, insurance, and wealth management dollars." 5. Acknowledge existence of widespread bankruptcy risks: "Must support publicly traded companies mergers, acquisitions, and restructurings... and study & unveil new policy measures to protect small and medium investors".

In a bold move to revitalize its economy and restore investor confidence, China unveiled a comprehensive package of monetary and fiscal measures less than a week before the country goes on a week-long holiday. Concerns about fundamental weakness in the world’s second-biggest economy, however, temper optimism on the positive near-term impact of the measures. Read the latest from Nurluqman Suratman #ICIS #China #economy #PBOC #interestrates #ING #DBS #inflation #PMI https://lnkd.in/eAhxU7je

China's Economic Boost: Understand China's Latest Monetary Policy Moves in Less Than 5 Minutes China's central bank has unveiled significant measures to revitalize its economy. Let's break down these initiatives and their potential impact, and At the End, does this really solve the issue or is it noise? The key interventions can be summarized as: 1️⃣ Interest Rate Cuts 2️⃣ Reserve Requirement Reductions 3️⃣ Easing Stock Market Restrictions 4️⃣ Lowering Housing Deposit Requirements 1. Interest Rate Cuts The People's Bank of China (PBOC) has cut interest rates on existing mortgages by 0.5 percentage points. This move aims to: Reduce borrowing costs for homeowners. Ease financial burdens on property owners. Stimulate consumer spending by increasing disposable income. 2. Reserve Requirement Reductions By lowering the reserve requirement ratio for banks, the PBOC encourages increased lending: Banks can lend more with less capital held in reserve. More liquidity is injected into the economy. Supports businesses and fuels economic growth. 3. Easing Stock Market Restrictions Governor Pan Gongsheng announced plans to: Ease restrictions on borrowing to invest in stocks Therefore, at the margin, boost investor confidence in Chinese markets. Resulted in the Shanghai Composite Index rising over 4% shortly after the announcement. 4. Lowering Housing Deposit Requirements To stimulate the property market: The required deposit for purchasing a second home is reduced from 25% to 15%. Makes real estate investment more accessible. Aims to rejuvenate the struggling property sector. 💡 The Main Takeaway 💡 China is proactively implementing monetary policies to: Stimulate economic growth. Support the housing market. Boost investor confidence. 💡The Main Question💡 will this be enough the Jumpstart the chinese economy out of a Balance Sheet Recessio, my take is no! More Fiscal would be needed to revive the Chinese economy, More Credit and Cheaper credit is not the answer when everyone is already in a pile of debt The Measure, althouh positive, is more of a bandaid! Understanding these measures is crucial for navigating China's evolving economic landscape. Want to now what else made the News Explore this chart made with Asknews Data the Largest News Knowledge Graph in the World! https://lnkd.in/g44HJi_R Ask News:https://asknews.app/en

As China's economy struggles and its equity market tumbles, a chorus of voices are starting to call for interest rate cuts from the PBoC. But we believe that China's economic struggles are more structural than cyclical in nature. Interest rate cuts therefore won't provide much support. What's needed is deeper reform - and since that seems unlikely to materialise, a long and difficult adjustment looms. More here: https://lnkd.in/eakK68De

Alongside our affirmation at ‘A+’, we have revised our Outlook on China’s sovereign IDR to Negative. The Outlook revision reflects increasing risks to China's public finance outlook as the country contends with more uncertain economic prospects amid a transition away from property-reliant growth to what the government views as a more sustainable growth model. Wide fiscal deficits and rising government debt in recent years have eroded fiscal buffers from a ratings perspective. Fitch believes that fiscal policy is increasingly likely to play an important role in supporting growth in the coming years which could keep debt on a steady upward trend. Contingent liability risks may also be rising, as lower nominal growth exacerbates challenges to managing high economy-wide leverage. China's 'A+' rating remains supported by its large and diversified economy, still solid GDP growth prospects relative to peers, integral role in global goods trade, robust external finances, and reserve currency status of the yuan. These strengths are balanced against high economy-wide leverage, rising fiscal challenges and per capita income and governance scores below those of 'A' category peers. The full rating action commentary is at https://lnkd.in/eAbhmR83. #fitchoncredit #chinaeconomy #sovereigns #markets #investing

After the March National People's Congress, Chinese regulators may adopt a more systemic policy response to the cascading real estate crisis after a series of piecemeal policy responses failed to reflate asset prices. The crisis began with insolvencies at highly levered developers before stress spread to local government financing, consumers using homes as a store of value, investment products and companies, bank equity, and currency weakness. Recent policy measures include attempting to export excess production, limits on short selling, reductions in bank reserve requirements, official support for affected banks, restrictions on access to foreign assets, and arresting many executives for suffering poor business outcomes. Chinese leader Xi Jinping may use the March gathering to unveil a more focused set of policy measures, transitioning growth to a new model by supporting consumer spending instead of business investment. Current policies failed to stop the contagion from a deflating real estate bubble that began with financial problems at developer Evergrande three years ago. Attempts to maintain business investment by exporting surplus increasingly threaten trading relationships, as evidenced by recent disagreements with the EU about rapidly rising electric vehicle sales. Bans on short selling do not support asset values long term and simply cause the selling pressure to migrate to unaffected investors, venues, and time periods. Reducing bank reserve requirements makes the financial system more fragile. Purchasing artificially overvalued equities just wastes money and does not change intrinsic values. Argentina's current crisis shows that draconian external currency controls primarily redirect economic activity into circumventing currency controls. Arresting executives for suffering contagion from the collapse of an officially supported real estate bubble does nothing to address underlying economic issues. China should transition to policies that support consumer spending through programs to reinforce confidence. The country needs a New Deal style package of reforms to provide a social safety net that will allow consumers to save less, freeing up funds to drive a consumer led recovery. China faces demographic challenges similar to Japan with a falling population naturally reinforcing domestic deflationary trends. Last year's 5%+ GDP growth likely overstated activity due to Covid-related base effects. After three years of deflationary pressure and spiraling levels of public debt, lower prices could cause a vicious cycle. Xi Jinping may finally be ready to take dramatic action aimed at breaking the trend. #investing #equities #markets #realestate #china

China chose to stick with the stimulus concept which was implemented amidst pressure from the international monetary fund (IMF) to carry out economic reforms, especially more liberal ones or what is known as pro-market. Chinese Prime Minister Li Qiang in his speech at the China Development Forum argued that there is still a lot of room for macroeconomic policies to be expanded. Steps to make the country's economy turn faster again. Li's confidence is supported by relatively low consumer price growth and not high central government debt levels. Moreover, said Li, the steps taken to limit risks in depressed areas such as property have shown positive developments. The Bamboo Curtain country has reported a good start to the year, with export growth, industrial production and investment growing beyond expectations. This has reduced the urgency for authorities to create additional stimulus in the short term. The government itself is said to be preparing anticipatory steps. For this year, Li said the government would implement policies to encourage increased domestic demand. He will also emphasize China's focus on developing advanced manufacturing and technology. However, he did not explain in detail how policies could be strengthened. Li said only that China would continue to push for overall borrowing costs to fall, after guiding banks to cut the property sector's benchmark interest rate to a record high last month. On the other hand, IMF Managing Director Kristalian Georgieva said that China could see additional growth of 20% over the next 15 years, if it carried out fundamental reforms to its economy. Meanwhile, this IMF-style liberalization policy is believed to be able to overcome various problems such as reviving the property market, increasing domestic consumption, the business environment, the regulatory framework for artificial intelligence and electricity prices. Read our other insightful economic news: https://lnkd.in/exQ-kXwE #FPG #Fortuneprimeglobal #commodity #equity #technicalanalysis #technology #news #investors #intraday #investing #fundamentalanalysis #stake #markets #liquidity #nasdaq #forex #portfolio #trading #capital #stocks

China’s financial authorities are likely to continue to stimulate their economy in an effort to hit their challenging GDP target for 2024. We examine possible stimuli and implications for investors. #investing #china #PBOC #interestrates

https://lnkd.in/gGcXZWgF Now this is an absolute bizarre article. One can disagree with whether the Chinese government should put in stimulus, but the reasons *why* they aren't putting in stimulus shouldn't be baffling. The bazooka that the US put in resulted in a burst of inflation and an asset bubble that is making governments very, very unpopular. Given that you had *riots* in 2019 in Hong Kong over rent and property prices, and given that inflation triggered the Tiananmen protests and the collapse of the KMT government in 1949, there is pretty good reason for the Chinese government not to push massive stimulus.