Investors give lukewarm response to China’s stimulus briefing

SINGAPORE (Reuters) – China announced on Saturday that it will significantly increase government debt issuance to provide subsidies to low-income individuals, support the property market, and bolster state banks’ capital in an effort to stimulate economic growth.

Finance Minister Lan Foan stated at a press conference that there will be additional counter-cyclical measures implemented this year, but specific details regarding the size of the fiscal stimulus were not disclosed, causing uncertainty among global financial markets.

Investors and analysts shared their perspectives on the press briefing from China’s finance ministry:

HUANG YAN, INVESTMENT MANAGER, PRIVATE FUND COMPANY SHANGHAI QIUYANG CAPITAL CO, SHANGHAI:

“The announced fiscal stimulus plan appears weaker than anticipated, lacking a clear timetable, amount, or details on how the funds will be allocated. This lack of transparency may lead to a slowdown in the stock market bull run.”

RONG REN GOH, PORTFOLIO MANAGER, EASTSPRING INVESTMENTS, SINGAPORE:

“Investors were disappointed by the vague guidance provided during the press conference, as they were hoping for specific numbers and commitments. However, some meaningful measures were announced, including increased debt issuance by the central government and more support for the housing market.”

FRED NEUMANN, CHIEF ASIA ECONOMIST AT HSBC, HONG KONG:

“By easing restrictions on local governments to address excess housing inventory, officials are offering support to the housing market. However, concrete numbers on additional government commitments are expected to be revealed later this month.”

ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT:

“The press conference highlighted the government’s capacity to issue more bonds and raise the fiscal deficit, with a focus on assisting local governments in debt repayment. While specific numbers were not provided, the policies indicate a positive direction for the economy.”

MATTHEW HAUPT, PORTFOLIO MANAGER, WILSON ASSET MANAGEMENT, SYDNEY:

“Despite the lack of headline numbers, the policy measures being implemented are likely to lead to positive outcomes for the Chinese economy. The intent behind these measures should boost sentiment and encourage capital flows.”

HUANG XUEFENG, CREDIT RESEARCH DIRECTOR, SHANGHAI ANFANG PRIVATE FUND CO, SHANGHAI:

“The focus appears to be on addressing the fiscal gap and local government debt risks, falling short of market expectations. Without measures targeting demand and investment, it may be challenging to alleviate deflationary pressures.”

VASU MENON, MANAGING DIRECTOR, INVESTMENT STRATEGY, OCBC, SINGAPORE:

“China’s Ministry of Finance press conference lacked numerical details that investors were eagerly anticipating for a big bang fiscal stimulus. Despite the government’s determination, the lack of specific numbers may impact the stock market rally.”