China's new stimulus plans make a splash in global markets
LONDON, Sept 25 (Reuters) -China-exposed assets jumped on Tuesday after Beijing announced its biggest stimulus since the pandemic in a bid to pull the world's second-largest economy out of the deflationary funk that has shaken global currency and equity markets this year.
The broader-than-expected package offers more funding and interest rate cuts.
European stocks, emerging-market currencies and commodities lapped up the news, but analysts questioned how effective it would be in the longer run, given extremely weak credit demand from domestic businesses and consumers.
Here we look at five places where China's economic weakness has been particularly felt, and what these new measures might mean.
GOING UNDERGROUND
Bruised mining stocks were the biggest gainers in Europe and Australia on Tuesday.
"The stimulus measures may support the property markets more than broader consumption or industrial activity and so it is no surprise that the depressed mining stocks are outperforming," said Gerry Fowler, head of European equity strategy at UBS.
"It remains to be seen if these measures are sufficient to ignite more private sector optimism. History would suggest fiscal rather than monetary measures are more effective."
An index of European mining stocks rose 4.6% .SXPP its biggest daily gain in two years, while Australian mining stocks rose 2.8%, logging their largest daily rise in a year.
Both have been under pressure in recent months.
HEY, BIG SPENDERS
Shares in European luxury retailers, popular with China's once-big spending urban middle class professionals, have been among the most obvious victims of economic weakness in the world's second largest economy.
A benchmark of European luxury stocks is down 4.2% year to date .STXLUXP versus a 7.7% rise in the STOXX 600 .STOXX.
However, that same benchmark jumped 3% on Tuesday on the back of the new measures. If sustained that would be its biggest one-day jump since January.
Analysts at RBC say within the luxury sector, the revenues of Swatch Group UHR.L, Burberry BRBY.L and Richemont CFR.S are the most exposed to China. Their shares were up between 2 and 5% on Tuesday.
U.S. shares have reacted less than European, with the S&P 500 .SPX down 0.1% at 1455 GMT.
"There, you have an economy that is much less geared to China demand, in Europe this kind of gearing is way more," noted Andreas Bruckner, European equity strategist at Bank of America.
TRADE IN DEUTSCHLAND
China is Germany's second-biggest trading partner after the United States, so many of its companies suffered as demand for cars and machinery weakened while competition from Chinese domestic rivals grew, an additional drag on an economy already reeling from an energy crisis triggered by Russia's invasion of Ukraine.
If China's new measures help stabilise the real estate market, this would have a positive impact especially on the German chemical sector, said Uwe Hohmann, equity strategist at Metzler Capital Markets.
German carmakers like Volkswagen VOWG_p.DE and BMW BMWG.DE and auto part suppliers are facing more of a structural issue due to competition with local rivals, and thus a stabilization in the market would affect them less, Hohmann said.
COMMODITY EXPORTERS
China has been an engine of growth for emerging markets near and far, sucking in especially their commodities and oil exports in boom times whenever the world's number two economy gets a shot in the arm.
But this time might be different.
"There is still no major fiscal stimulus directly aimed at the anaemic consumer, which remains the key constraint," said Hasnain Malik at Tellimer. "Therefore, (the) package again falls short of the 'bazooka' stimulus that will alter the outlook for global commodities demand."
Yet economies geographically closer to China and that have close trading ties with the country could see some tailwinds - as could those holding their domestic government bonds, said Charu Chanana, strategist at Saxo Markets in Singapore.
The stimulus is also coming hot on the heels of a super-sized U.S. Federal Reserve rate cut, which generally marks a sweet spot for emerging economies.
ANOTHER FX PERSPECTIVE
China's yuan hit its highest in 16 months, defying the conventional pull of gravity in the FX market, in which stimulus and lower rates tend to translate into a weaker currency.
But the prospect of a boost for the country's massive economy and its markets is enough to get people flocking.
China-sensitive currencies like the euro EUR=EBS, Australian dollar AUD=D3 and Malaysian ringgit MYR= - which has vaulted to three-year highs after Beijing's burst of stimulus - are all likely to gain a foothold against the dollar, as investors favour more cyclical currencies.
But it's the "reflation trade pair", the euro against the Aussie dollar, that could act as a better gauge of how successful investors believe China's efforts are, according to a number of analysts.
Euro/Aussie EURAUD=R was up on Tuesday, on shifting Australian rate expectations, but has been trending lower, dropping 5.5% in seven weeks, compared with a 1.6% rise in euro/dollar and a 0.8% rise in the euro/onshore yuan EURCNH=R.
European luxury names underperform https://reut.rs/3BqGjww
Trading China https://reut.rs/3THfMkX
European auto stocks feel chill from China https://reut.rs/3XVlnqo
Going deeper underground https://reut.rs/3Zv6aO6
EM portfolios see $30.9 billion inflow in August https://reut.rs/3BfgejZ
EM portfolios see $30.9 billion inflow in August https://reut.rs/4dccvkC
Reporting by Lucy Raitano, Amanda Cooper and Karin Strohecker in London, Linda Pasquini in Gdansk and Sruthi Shankar in Bengaluru; Compiled by Alun John; Editing by Alexandra Hudson
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
