It’s been over two weeks since the first reports that China was mulling a 2 trillion yuan package to stabilize stock markets and we’re now only two-and-a-half days until the Chinese new year holiday break. The market has been patient because of other signs that help is coming but Beijing will ultimately have to load up the bazooka and deliver.
At this point, a failure to offer some kind of rescue would be a middle finger to the stock market. And given the re-commitment to “socialism with Chinese characteristics” for Xi, it might be the final straw.
For now though, the market is showing some patience. Hong Kong shares are up 0.8% after rising as much as 1.5% while Shanghai Shares are up 0.9%.
Shanghai Comp daily
I’m keenly waiting for some rumors or announcements.
Here is Goldman Sachs on Chinese equities, via Zero Hedge.
“Chinese households allocate about 60% of their assets/wealth to real estate, but only 5% directly to equities, at the low end of the global spectrum. However, with the housing market likely going through a multi-year deleveraging downturn and return on cash staying under pressure in a rate-cut cycle, a bullish equity market could be an effective vehicle for wealth creation and sentiment booster for more than 220mn domestic individual investors, who collectively own US$3tn of A-share market cap (37% of total)”
Makes sense but this talk of 60% tariffs from Trump doesn’t help. Obviously that’s never going to happen but it’s tough to step in front of ahead of an election.