Daily Brief Macro: OVER THE HORIZON: HK/CHINA No Longer the Stock Market Pinata! and more

• HK/China markets have entered a Bull market trend which was sparked by Beijing’s multi-faceted stimulus program.
• An overhang of extreme pessimism on China’s economy and markets will gradually dissipate as the media/analyst narrative will follow the market higher.
• As discussed in previous insights, a turn in sentiment is the key to not only moving the market but also to reviving the Chinese consumer.

• Welcome to our weekly EM/China Watch, where we examine the Chinese market from the perspective of Western investors.
• It’s been a significant day in China with the announcement of a range of measures by PBoC Governor Pan Gongsheng.
• China’s economic stimulus plan includes a series of monetary easing measures.

• The Chinese markets have warmly welcomed this morning’s news that the People’s Bank of China (PBOC) plans to introduce significant stimulus measures, surpassing market expectations.
• The most notable measure involves reducing borrowing costs on up to USD 5.3 trillion in mortgages and easing rules for second-home purchases.
• This has brought growth back into the spotlight.

• We begin with the Ifo Employment Barometer, which took a sharp downward turn, reinforcing the recessionary signals from last month’s data.
• In our view, it’s only a matter of time before Lagarde shifts her focus from inflation to employment, much like the Fed has done.
• Our models suggest year-over-year inflation will reach 2% by early 2025, making employment the likely next priority.

• The 2021 power shortage in China has captured the market’s attention, and begs the question of whether this coming winter is safe against blackout.
• Markets are concerned that any extended power outage may impose additional and even bigger headwinds to the Chinese economy on top of the looming Evergrande debt crisis and regulatory oversight.
• The 2021 power shortage in China was caused by the inability of state grids to raise electricity prices and a supply-demand shortfall in energy production sources, in particular coal. 

• Huy Anh Natural Rubber appoints Koltiva to help it  
• VRG holds training as per PEFC ST 2002-1:2024 Module Standard  
• Experts call for a national support website

• Crowding out has regained relevance post-pandemic, as large fiscal deficits put upward pressure on interest rates, contrasting with the post-GFC liquidity trap narrative.
• Global capital markets can no longer mask crowding out because simultaneous fiscal deficits in major economies constrain the potentially offsetting capital flow.
• The UK is opting for state-led interventions, crowding out the private sector by design, while the US stimulates private investment via public spending initiatives.

• Direct Reduced Iron (DRI) is playing a significant role in India’s steel industry, accounting for 33% of total steel output
• India’s DRI market is characterized by rapid growth driven by steel production targets and sustainable steel making practices
• DRI production is concentrated in central and eastern parts of India, with states like Chhattisgarh and Odisha being prominent producers and trade hubs.

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• For the week ending 20/Sep, US crude inventories declined by 4.5m barrels, surpassing expectations of a 1.3m barrel drawdown. Gasoline and distillate stockpiles also decreased more than analyst estimates.
• US natural gas inventories rise 47 Bcf for the week ending 20/Sep, lower than analyst expectations of a 52 Bcf buildup. Inventories are 7.1% above the 5-year seasonal average.
• BP and Shell experienced rating downgrades and target price reductions, while TotalEnergies and Exxon Mobil saw upward revisions in their target prices.

• Asia New Vision Forum /: Dialogue between Hu Shuli and Heng Swee Keat on tackling global challenges 
• Central banks /: Asian central banks in no rush to follow Fed in cutting rates
• TikTok /: TikTok Music comes to the end of the track in strategy shift