China Policy Watch-Beijing isn't done yet
Sept 25 (Reuters) -While financial market have responded positively to China's much-delayed stimulus package, economists remain sceptical, pointing outthat even more supportwill be needed. Yet Beijing is probably notdone.
Chinese stocks and the yuan continued tosurge Wednesday, after Tuesday's unveiling of a wide swathe of economic stimulus measures. The offshore yuan extended its rally past the 7.0000 watermark to reach a new 16-month high of 6.9952. The Shanghai composite stock index surged 2.4% while Hong Kong's Hang Seng sprinted 2.3% higher.
The People's Bank of China delivered on its promise to cut rates, starting with a 30 basis-point easing of the one-year medium-term lending facility rate to 2.00%,as signalled on Tuesday. The seven-day reverse repo rate, earmarked to betrimmed by 20 bps to 1.50%, is likely next.
Still on the cards is a planned 50 bps slashing of banks' reserve requirement ratio, as well as a cut in the benchmark one-year and five-year loan prime rates; the latter affects household mortgages.
And there could be more in store beyond the telegraphed monetary policy easing moves. Tuesday's coordinated announcement ofthe economic boosters suggests policymakers' sense of urgency has risenanother notch or three.
While Beijing has acted judiciously to lower lending costs, support property markets, reduce mortgage burdens, and to juice the equity markets, there are a couple of major issues to address before naysayers will relent.
First, consumer confidence, which might pick up if property prices finally turn a corner, possibly via a knock-on effect from a sustained rally in equities.Second, joblessness, particularly among the youth, needs to be remedied. Beijing must leave no stone unturned if it wants to hit its 2024 GDP target.
For more click on FXBUZ
China rates: https://reut.rs/3TFOHhY
Ewen Chew is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
