Magazine covers happen to be quite effective as contrarian indicators (i.e peak pessimism usually takes place at the bottom; peak optimsim at the top).
Could The Economist cover page on #china (Xi's failing model) coincide with a bottom for Chinese equities? China stocks surged on Monday after authorities announced a package of measures over the weekend to boost investor confidence, including halving the stamp duty on stock trading. China’s blue-chip CSI 300 Index jumped roughly 3% in early morning trade, on course for its best day since November, while the Hang Seng benchmark advanced more than 2%.
Chinese stocks slid in early Friday trading, an indication of entrenched investor pessimism even after authorities urged the nation’s top financial institutions to help stabilize a struggling market.
The CSI 300 Index of shares in Shanghai and Shenzhen dropped as much as 0.7% shortly after the opening bell, extending its slump this month to 7.7% and keeping it as one of the world’s worst performers this year. A key gauge of Hong Kong-listed Chinese firms declined a maximum 1.3%. The selling came after the China Securities Regulatory Commission used a seminar Thursday with executives from the country’s pension fund, some large banks and insurers to ask them to boost support for the market. The market’s indifference isn’t necessarily a surprise, given regulators have held similar meetings regularly in the past and they have rarely had a significant impact. Source: Bloomberg
Overnight, Chinese banks made a smaller-than-expected cut to their benchmark lending rate
(cut 1-year rate by 10bps; no change in 5-year while the market was expecting a 15-basis-point cut on both rates) and avoided trimming the reference rate for mortgages, despite the PBOC urging lenders to boost loans. Banks’ failure to follow the central bank suggests they were unprepared, but that cuts to their lending rates may still arrive in the coming months.. Meanwhile, The Hang Seng Index declined as much as 1.8% and was set for its lowest close since November. Shares in mainland China also dropped into a second day, with finance stocks among the worst performers. Source: Bloomberg
China’s central bank issues Sunday statement
They said that on Friday, China’s central bank and financial regulators met with bank executives and told lenders again to boost loans to support a recovery, adding to signs of heightened concern from policymakers about the deteriorating economic outlook. Authorities also urged for adjustments and an optimization of policies for home mortgages at the meeting on Friday, according to a statement from the People’s Bank of China on Sunday, without elaborating on the housing initiatives. China is expected to make the biggest cuts this year to two of its core lending rates as pressure mounts on policymakers and banks to reverse slowing momentum and revive flagging demand in the world’s second-biggest economy.
China is more dependent on real estate than any other country
Almost 30% of Chinese GDP dependent on #realestate combined with 50 million vacant apartments is a dangerous mix. Source: FT
In 2009 China sparked global reflation. In 2023, could China to spark global deflation?
Source: www.zerohedge.com
The fact that Chinese State property developers are also in big troubles complicates the issue for the China real estate
Mainly, as it reduces their ability to support the sector by taking over incomplete projects by private sector. Source: Bloomberg
China’s heavily indebted property developer Evergrande group on Thursday filed for Chapter 15 bankruptcy protection in a U.S. court
In a filing to the Manhattan bankruptcy court, the firm sought recognition of restructuring talks under way in Hong Kong, the Cayman Islands and the British Virgin Islands. The world’s most indebted property developer defaulted in 2021 and announced an offshore debt restructuring program in March. Trading of Evergrande shares have been suspended since March 2022. The Chapter 15 bankruptcy protection allows a U.S. bankruptcy court to intervene in cross-border insolvency case involving foreign companies that are undergoing restructuring from creditors. It aims to protect the debtors’ assets and facilitate the rescue of businesses that are in financial trouble. Tianji Holdings, an affiliate of Evergrande, and its subsidiary Scenery Journey, also filed for Chapter 15 protection in a Manhattan bankruptcy court, according to the filing. Source: CNBC, FluentInFinance
