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The Nasdaq Golden Dragon China Index, where Chinese companies are listed on the Nasdaq stock exchange in the US, rose almost four percent on Tuesday – led by electric car maker Xpeng, which rose 10.7 percent. This happened at the same time that news was leaking from China after the markets closed for the day.
There was a festive atmosphere on the Hong Kong stock exchange on Wednesday morning, where the Hang Seng index rose by more than 2.2 percent in the first hour of trading. There is also a revival on the Chinese mainland. Over the year as a whole, the Hang Seng index fell 13.7 percent.
Historical visit
President Xi Jinping has been criticized for handing over responsibility for the economy to Prime Minister Li Qiang and his team. On Tuesday, Xi appeared at the central bank buildings, along with Vice Prime Minister He Lifeng and other senior leaders.
This is historic and will be his first visit to the People’s Bank of China as president. He is said to have participated in meetings where the management of China’s foreign exchange reserves of more than $3 trillion was discussed. Economic summits will be held in China next week to discuss the risks at the banks.
Late Tuesday evening, the official Xinhua news agency confirmed that China’s legislature has approved a plan to increase the annual budget deficit from three percent of gross domestic product to 3.8 percent. The communist leadership previously set a ceiling of three percent.
The article continues below the advertisementThe Legislative Assembly approved the issuance of 1,000 billion yuan (1,520 billion kroner) of new government bonds.
– It is rare that central authorities’ plans are revised outside the normal budget plan. The move signals clear concerns about near-term growth, Mark Williams, chief Asia economist at Capital Economics, said in a report.
He believes that the adjustment is aimed at investment rather than consumption.
– The question is why they don’t do more. The answer is that the Treasury Department already thinks they’re doing a lot, Williams says.
– Sends a strong signal
International financial institutions believe that the signaling effect is particularly important. President Xi is seen as paralyzed by the pandemic.
– With an unusual adjustment mid-year, when the growth target is on track, and an equally rare visit to the central bank by senior management, this sends a strong signal to decision makers about their intention to stimulate the economy with coordinated monetary policy measures. and easing fiscal policy, Robin Xing, chief China economist at Morgan Stanley, said in a report.
China watchers have been waiting for measures since this summer.
The article continues below the advertisement– This is more positive than we expected and is another step to stimulate the economy, says the chief economist.
Goldman Sachs is on hold.
– The decision-makers have shown their commitment to the economy and the financial market through various actions, which can to some extent help restore confidence, the American financial institution writes in a report.
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A number of new replacements were confirmed on Tuesday. Lan Foan, 61, was appointed as the new Finance Minister on Tuesday. He was previously the leader of the Communist Party in Shanxi Province.
Defense Minister Li Shangfu has been ousted after being removed from office and investigated. This summer, Foreign Minister Qin Gang was fired
Serious setback
The CSI 300 index, which includes the 300 largest and most traded stocks on mainland China’s stock exchanges, has fallen more than 13 percent since early August. It has been a regrettable development for years. In the past five years it has increased by less than five percent.
– China simply cannot allow the indices to breach critical support levels, which would be a serious setback for both investors’ and consumers’ willingness to spend, Neo Wang, head of analysis at Evercore ISI, told Bloomberg.
The Chinese authorities have set the growth target for the economy at “around five percent” in 2023. There are major problems in the real estate sector, which traditionally accounts for about a third of value creation.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases via links that lead directly to our pages. Copying or other use of all or part of the contents may only be made with written permission or as permitted by law. For further conditions see here.
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