China's stimulus message leaves investors wanting though hanging onto hope
By Samuel Shen, Ankur Banerjee and Tom Westbrook
SHANGHAI/SINGAPORE, Oct 12 (Reuters) -China's highly anticipated announcement of financial stimulus plans on Saturday was big on intent but low on the measurable details that investors need to ratify their recent return to the world's second-biggest stock market.
Saturday's news conference by Finance Minister Lan Foan reiterated Beijing's broad plans to revive the ailing economy, with promises made on significant increases to government debt and support for consumers and the property sector.
But for investors who were hoping to hear authorities spell out exactly how much the government will throw at the crisis, the briefing was disappointing.
“The strength of the announced fiscal stimulus plan is weaker than expected. There's no timetable, no amount, no details of how the money will be spent," said Huang Yan, investment manager at private fund company Shanghai QiuYang Capital Co in Shanghai.
Huang had hoped for more stimulus to boost consumption. Market analysts had been looking for a spending package between 2 trillion yuan to 10 trillion yuan ($283 billion to $1.4 trillion).
Reuters reported last month that China plans to issue special sovereign bonds worth about 2 trillion yuan this year as part of fresh fiscal stimulus. Bloomberg News reported China is considering the injection up to 1 trillion yuan of capital into its biggest state banks. Lan's press conference did not give any specifics.
In the three weeks since the People's Bank of China (PBOC) kicked off China's most aggressive stimulus measures since the pandemic, the CSI300 Index .CSI300 has broken records for daily moves and is up 16% overall. Stocks have grown wobbly in recent sessions, though, as initial enthusiasm gave way to concerns about whether the policy support would be big enough to revive growth.
"If that's what we have in terms of fiscal policies, the stock market bull run could run out of steam," Huang said, referring to comments at Saturday's press conference.
Heading into the briefing, some investors had braced for the finance minister to withhold actual spending details until China's rubber-stamp parliament meets later this month.
Equally, investors also worried that mere interest rate cuts, which the PBOC has already announced, and a reluctance by the central government to spend will imperil the odds the world's second-largest economy can hit its 5% growth target.
"Investors will need to be patient," said HSBC's chief Asia economist Fred Neumann, noting concrete numbers could come only by the end of this month when the standing committee of the National People's Congress reviews and votes on specific proposals.
Jason Bedford, former China analyst at Bridgewater and UBS, pointed to Lan's pledge to recapitalise big state banks as indicating authorities expect to see a revival in demand for credit.
"But the only way the economy needs more credit is if you create credit demand which can only be done if you provide fiscal (support)."
HOW MUCH?
Investors have good reason to be circumspect about how much Beijing will spend. The slump in consumer confidence and the property sector is a by-product of the years-long drive by the Communist Party leadership to reduce debt and root out corruption.
Yet, the hope that authorities are serious to fix those issues has driven foreign investors and domestic retail money into stocks. The PBOC's 500-billion-yuan swap facility to channel more cash into the stock market has helped.
The Shanghai Composite index .SSEC is up 12% since the measures were first announced on Sept. 24, but property .CSI000952 and tourism .CSI930633 stocks are still dragging in a sign of some doubts around the extent of state support.
Global commodity markets from iron ore to other industrial metals and oil have also been volatile on hopes stimulus will stoke its sluggish demand.
"Potentially some event money might be disappointed and remove some bets on the headline numbers not meeting high expectations but the more important capital flows might be encouraged by continuing efforts to stabilise the economy and keep growth at appropriate levels," said Matthew Haupt, portfolio manager at Wilson Asset Management in Sydney.
According to LSEG Lipper data, overseas China funds received a net $13.91 billion since Sept. 24, pumping up inflows so far in 2024 to $54.34 billion. Much of that money has gone into exchange-traded funds (ETFs), while mutual funds are still reporting net outflows of $11.77 billion for the year.
Bedford is hopeful of a revival in retail interest sustaining the stock market rally.
"We have a perfect storm of four factors at play," he said, citing pent-up household savings and a lack of attractive alternatives to the stock market, an alignment of corporate and shareholder interests driving up buybacks and dividends, and central bank programmes offering leverage to corporates and institutions to invest in the stock market.
"A sustained rally driven by the China household has the foundations for success ... we are early in this process and the risk is the possibility of flawed execution or not communicating things well. The structural story remains compelling though."
($1 = 7.0666 Chinese yuan renminbi)
Reporting by Ankur Banerjee, Tom Westbrook in Singapore, Samuel Shen in Shanghai, Gaurav Dogra in Bengaluru
Writing by Vidya Ranganathan; Editing by Kim Coghill
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。
