bearish
China Stimulus Update – Centralization of Debt Still Means MORE Debt!
626 Views25 Oct 2023 17:38
Boomeranged on Fri, 3 Nov 2023 15:36
China just can't get a break. The Caixin Manufacturing PMI fell below 50 again in October, while the Services PMI is stuck just above that level.
China will add another CNY 1 trillion in stimulus, trying to get out of the ongoing real estate recession, pushing its budget deficit for this year to a whopping 7%+.
Meanwhile, the PBoC, must continue selling USD to prevent the Yuan from weakening.
SUMMARY
- The latest wave of China stimulus not only confirms the dire financial state of local governments but also indicates that they have reached the limits of their borrowing capacity.
- China President Xi’s visit to the PBoC raises the likelihood of new interest rate cuts and cuts in the Required Reserve Ratio for banks.
- This puts the PBoC in a precarious state. No easing means the property recession continues, while the opposite means it must sell more US dollar assets to prevent yuan depreciation.
Get started on the Smartkarma Research Network with a complimentary Preview Pass to:
- Unlock all research summaries
- Follow top, independent analysts
- Receive personalised alerts and emails
- Access Briefings, Analytics, and Events
Upgrade anytime to our paid plans for full-length research, real-time analyst discussions, and more.
Join a thriving community of 45,000+ investors, including the top global asset managers managing over $13trn in assets.
or
Already have an account? Sign In Now
Discussions
(Paid Plans Only)
- Powell Beats UGLY ISM in Two Sentences – Stocks Fly02 Nov 2023
- What A Soft Landing Looks Like30 Oct 2023
- The Weekly Market Monitor – Reality Check!27 Oct 2023
- China Stimulus Update – Centralization of Debt Still Means MORE Debt!25 Oct 2023
- China’s Ongoing Real Estate Disaster Is Pushing Emerging Markets to the Brink15 Aug 2023
- The Weekly Market Monitor (31) – Bye, Bye, Triple-A04 Aug 2023
x