CHN.cash index contracts, reflecting the performance of the Hang Seng Index's largest companies, gain more than 3.5% today. Investors expect that the higher tariffs that Trump is likely to impose on the Chinese economy could make the announced stimulus tools for the economy final stronger than originally expected.
- Import data for October also pleased the market today, reassuring it that China's economy may indeed have begun to slowly 'feel' the aid measures so far. Steel imports rose the strongest since 2015, while gas and coal imports rose 14% y/y.
- After temporary declines triggered by the U.S. election, investors began accumulating Chinese assets again, and the Hang Seng closed the session at more than 2% plus. Shares of real estate developers and consumer goods performed best during the Chinese session. The current expected size of the 'stimulus' is about $1.4 trillion; its scale is expected to be similar to that of 2008.
- Liu Shijin, former deputy director of the State Council's Development Research Center, suggested that structural changes beyond short-term relief measures will be needed to stimulate demand in the long term
- Currently, the market speculates that the final size of China's stimulus could be 12 trillion yuan (about $1.6 trillion) versus the 10 trillion yuan ($1.4 trillion) expected earlier.
- Of that, 2 trillion yuan would be addressed to directly stimulate consumption, 4 trillion yuan to the real estate market and 6 trillion yuan to regional governments to convert debt into low-interest bonds
- ANZ Research indicated that expectations around stronger stimulus programs are not fully justified, as the momentum of data from China so far suggests that growth targets for this year (5% of GDP).
CHN.cash (H1 interval)
Hang Seng futures are trading up today and testing local maxima; the MACD averages suggest that the upward momentum may extend. Yesterday's declines have been completely erased. The nearest resistance levels are 7700 - 7800 points (previous price reactions and the 23.6 Fibo of the last upward impulse).
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