Source: Bloomberg
Author: sangmi CHA, Winnie Hsu
The press conference held by the Ministry of Finance on Saturday was highly expected by the market, but the actual firepower was not as expected as stock investors, which showed that the domestic stock market may continue to recover after the rise.
The Minister of Finance Lanfo An promised to launch more support policies and hinted that it would increase the government's debt to boost the economy. However, the press conference did not announce the specific amount of new stimulus measures.Consumption has always been a weak link in the economy, and the press conference is not good for the launch of new stimulus measures to boost consumption. It is another reason for traders to be disappointed.
The Ministry of Finance "has done its best", but there is still a big gap between the content and the expectations of investors."Therefore, the investor's emotions as a whole are negative."
The patience of investors is gradually disappearing.China has risen sharply after the launch of a series of stimulus policies at the end of September. Investors have called on the Chinese government to declare major financial measures to maintain this rise.The Shanghai -Shenzhen 300 Index, one of the domestic stock market benchmark indexes, closed down last week and set the largest weekly decline since July.
The further rise in China's stock market may exacerbate people's concerns about the bull market, and then bring greater selling pressure.Earlier, the stimulus measures of Zero Zero Crossing Beijing only brought a few brief rebounds, and the market fell into a rising and falling cycle.
Blue Buddha An and its deputy also said at the press conference on Saturday that they will support local governments to use special bonds to acquire existing commodity houses, but they do not give the specific quota for improving fiscal stimulus measures.He also pointed out that there is still a lot of room for debt lifting and deficit to enhance the space, and these measures may be launched later or early November this month.
Before the press conference, investors and analysts who received Bloomberg surveys predict that China will launch new fiscal stimulus measures up to 2 trillion yuan on Saturday, including potential subsidies, consumer vouchers and multiple childrenFamily financial support.
"The space for further fiscal stimulation is still considering", Magellan Investments Holdings LTD.'s long -time stock leader Britney Lam said.She also said that at the same time, "the market will continue to choose to be in the early stage of profit."
The inflation data released on Sunday may exacerbate investors' concerns.In September, China's residents 'consumer prices (CPI) increased lower than expected, while industrial producers' ex -factory prices (PPI) declined for the 24th consecutive month, highlighting the need to further increase policy support to help the economy get rid of shrinkage.
The CSI 300 Index fell 3.3%last week, but it still rose by 21%on September 23 on the eve of China ’s launch of a package of stimulus.These stimulus measures include interest rate cuts and providing liquidity support for the stock market.Last week, the Hong Kong Hang Seng China Enterprise Index fell 6.6%, and the cumulative increase of more than 30%in the previous three weeks.
The epic rebound of the Chinese stock market has prompted companies such as Goldman Sachs Group and Berlaide to repair their expectations, but it also caused other people's doubts, such as Invesco LTD.It's fierce.
What is the next step?
In the next few weeks, investors will soon turn their attention to the next major policy release window, and people who are responsible for approval of budget deficit will provide more details of stimulus measures.At the meeting in October last year, the Standing Committee of the National People's Congress approved the addition of government bonds and raised the budget deficit rate.
Frances Cheung, a strategist for Overseas Chinese Bank, said that because the Ministry of Finance also uses words such as "larger or large space" on Saturday to describe these measures, traders will continue to wait for more details.
"Overall the market is unlikely to become excited," when asked about what the stock market might respond on Monday.
China Treasury bonds have not changed much on Saturday.The trader said that as of noon on the day, the 10 -year Treasury yield had removed the previous decline of up to 2 basis points.These traders demand anonymous because they are not allowed to be publicly commented.
Strengthening fiscal stimulus may encourage traders to transfer funds to more risks and higher returns, thereby putting pressure on Chinese bonds.The increase in debt supply may also weaken the liquidity of the financial system and make the market more difficult to digest all debt.
Xing Zhaopeng, a senior Chinese strategist at the Bank of Australia and New Bank, believes that, in view of this year's bond issuance, the rate of yield curves may not go down further.Looking forward to the future, "China is expected to issue 1 trillion yuan over long -term government bonds and 10 trillion yuan local bonds," he added.
