Stephen Innes
SPI Asset Management
The upcoming week in China will begin with a thorough assessment of Typhoon Saola's human and economic toll. This powerful storm landed in Guangdong province over the weekend, unleashing its fury on Shenzhen, Hong Kong, and Macau. As authorities and communities grapple with the aftermath, the focus will be on understanding the extent of the damage and coordinating relief efforts to aid those affected by the typhoon's impact.
Hence, following up on last week’s market optimism could be challenging.
Last week, we witnessed a robust performance in the MXCN/CSI300 after The People's Bank of China (PBoC) took proactive measures by directing banks to lower interest rates on existing mortgages, effective September 25. Several prominent tier-one cities also took steps to ease the burden on homebuyers by reducing down payment requirements.
The Ministry of Finance (MoF) and the State Taxation Administration (STA) made noteworthy changes by reducing the stamp duty on stock trading. Meanwhile, the China Securities Regulatory Commission (CSRC) announced comprehensive initiatives aimed at better managing the pace of initial public offerings (IPOs) and refinancing, regulating insider selling practices, and lowering margin trading deposit ratios.
Further adding to a favourable financial landscape, the PBoC made a significant move by reducing the Foreign Exchange Reserve Requirement Ratio (FX RRR) from 6% to 4%, effective September 15.
In a diplomatic context, Premier Li Qiang and Vice Premier He Lifeng held a crucial meeting with US Commerce Secretary Gina Raimondo, solidifying their commitment to enhancing dialogue and upholding a healthy economic and trade relationship between the two nations.
Regarding capital flows, Northbound channels experienced outflows amounting to US$2.2 billion, while Southbound channels saw substantial inflows totalling US$1.8 billion.
While these individual easing measures may not appear substantial, their collective implementation clearly signals policymakers' intentions to stabilize the property market, spur economic growth, and boost overall sentiment. Further targeted measures are anticipated to be incrementally introduced until policymakers are content with the achieved results.
SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.
Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.
Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.
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