1 Oct 2024

JPMORGAN, on China stimulus:

“.. I don’t think it’s an exaggeration to say that China is acting somewhat out of desperation given the severity of the declines shown in the charts below.” [Cembalest] This is very close to our thesis >>> We view this stimulus package as an emergency policy adjustment designed to halt the downward trend, NOT to engineer a higher level of economic growth going forward. The package addresses short-term risks, but medium- and long-term challenges remain: Unfavorable demographic dynamics Households’ sentiment has been hit hard in the past four years and will need time to recover durably, a necessary condition for higher domestic consumption Business and investors’ sentiment has equally been damaged by the succession of regulatory crackdowns and anti-bribery campaigns. The latest announcements are an encouraging sign for domestic and foreign equity investors, but only a small first step in rebuilding the confidence toward Chinese listed companies. Trade barriers have already increased for China’s exports to the US and Europe and this trend is unlikely to reverse, especially if Donald Trump is elected Source: Carl Quintanilla on X

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