📈Chinese Market Rose To A 4-Month High On Economic Support Measures
🔴Chinese market rose sharply after the head of the People's Bank of China (PBOC) Pan Gongsheng announced new stimulus measures aimed at improving the economic situation as well as the investment climate in the country.
⏺During a press conference following PBOC meeting on September 24, he announced, in particular, a reduction in the reserve requirement ratio (RRR) for banks by 50 bps. This will allow liquidity to flow into the market in the amount of 1 trillion yuan ($142.15 billion). The head of the Chinese Central Bank made it clear that the base rate (LPR) could also be lowered by 0.2–0.25 percentage points.
⏺This is a clear attempt to cope with the slowdown in economic growth, especially given the weak performance in areas such as manufacturing and consumer spending. Given low inflation pressures and fiscal constraints, more gradual steps of this nature can be expected in an attempt to stabilize the situation without over-committing.
⏺While market participants said the policy measures were better than expected, many still question whether they will help revive consumer demand enough to halt the country's longest deflationary period since 1999. It will likely take more than just monetary policy to help the economy get back on its feet and effectively address the housing downturn.
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🔴Chinese market rose sharply after the head of the People's Bank of China (PBOC) Pan Gongsheng announced new stimulus measures aimed at improving the economic situation as well as the investment climate in the country.
⏺During a press conference following PBOC meeting on September 24, he announced, in particular, a reduction in the reserve requirement ratio (RRR) for banks by 50 bps. This will allow liquidity to flow into the market in the amount of 1 trillion yuan ($142.15 billion). The head of the Chinese Central Bank made it clear that the base rate (LPR) could also be lowered by 0.2–0.25 percentage points.
⏺This is a clear attempt to cope with the slowdown in economic growth, especially given the weak performance in areas such as manufacturing and consumer spending. Given low inflation pressures and fiscal constraints, more gradual steps of this nature can be expected in an attempt to stabilize the situation without over-committing.
⏺While market participants said the policy measures were better than expected, many still question whether they will help revive consumer demand enough to halt the country's longest deflationary period since 1999. It will likely take more than just monetary policy to help the economy get back on its feet and effectively address the housing downturn.
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