To The Moon

$BABA-W(09988)$  Thoughts on NDRC Press Briefing:

Market seems to be disappointed with the plans announced on RMB100B 💰 to local government for fiscal spending + balance RMB290B for project construction. Indeed for a USD 17.8Trillion economy, even along with PBOC announcement two weeks ago which totalled RMB 1.45 Trillion excluding adding asset swap program for brokerage & insurance comp etc. is less than 1% of GDP. 

However, I believed market overlooked minute details that was announced by regulators :

1) Issuance of $$ vouchers to low income group & cash voucher to support milk consumption trend - big change in Chinese gov approach which signalled they are aware of the deflation trend... Which comes to the next point...

2) The use of "deflation" in their official language - which used to be prohibited. It shows acknowledgement & awareness.

3) Consistent messaging on fixing real estate market with lower mortgage refinancing, 0.5% reduction on rate + RMB 300B in funds for local gov to buy up empty houses. - Expect further restriction easing & funds to local gov to buy up empty houses;

4) Opening up domestic market for foreign enterprise & shoring up capital market via measures to promote M&A activities (yet to be announce) along with swap programs for brokerage etc- emphasis of capital markets as a priority & FDI. 

5) Lowering of student loan rates to deal with job market mismatch; should improve university enrollment & consumption. - however more needs to be done;

7) Injecting liquidity into Bank reserves; 

8) Switching of funding model for infrastructure renewal towards a public private partnership model (private - REIT)

9) More of funding will come from Central gov via sharing of revenues from duties & loan ratios borne by central gov @ 100%.

All of this means, it's not a sprint. It's a marathon of continuous fiscal & monetary measures to restructure entire economic model away from real-estate-based funding model that started years ago due to massive migration of people from rural to urban areas. Today China is no longer the same. In fact, it's overdue. However, better late than never. I foresee a long term bull market if this continues; 🥂 

All the best my friends 😀