Big Banks’ interpretation of the NDRC meeting and Chinese Assets performance!
Markets have thin patience after years of uninvestability. Authorities need to get their messaging under discipline.
China Stimulus: Whatever It Takes Has to Be More Than This - Bloomberg
Goldman Sachs:
Large stimulus likely needs multi-department cooperation and fiscal funding.
Watching for policy updates from upcoming meetings.
Expecting approval of 1-2 trillion yuan in special long-term bonds by year-end.
Hong Kong market active but with selling bias; hedge funds selling financials, communications, and IT.
Long-only investors buying financials, real estate, materials, and healthcare.
Hong Kong $HSI(HSI)$ sees most outflows, while A-shares $SSE Comp(000001.SH)$ attract most inflows.
Post-Golden Week:
Offshore renminbi rebounded after NDRC's stimulus measures press conference.
Market disappointed with lack of stimulus details; Hang Seng China Enterprises Index down 10%.
NDRC mentioned 200 billion yuan for strategic projects and 2024 budget, less than expected.
$USD/CNY(USDCNY.FOREX)$ fix price neutral, avoiding bearish signal.
$USD Index(USDindex.FOREX)$ strengthened on good non-farm employment data, increasing demand for USDCNH options.
Renminbi positions turning short, with hedge funds leading.
Morgan Stanley:
NDRC press conference fell short of expectations.
No specific stimulus figures announced.
Focus on building market confidence.
Consumption is key, but stimulus scale limited.
No urgent upgrade to China's high allocation due to time needed for policy effects.
UBS:
Hang Seng China Enterprises Index fell 8% due to lack of fiscal stimulus.
Strong fixed income market demand.
U.S. Treasury $10-YR T-NOTE - main 2412(ZNmain)$ market volatility decreased.
Officials avoided questions on fiscal stimulus scale.
Retail investor behavior may increase market volatility.
UBS estimates a moderate 1.5-2 trillion yuan stimulus package.
Bank of America:
Buying bias in Hong Kong China capital flow decreased.
Long-term investors taking profits, hedge funds increasing short positions.
Active managers taking profits in internet, banking, and insurance.
Hedge funds shorting Chinese brokers, active in consumer sector.
Afternoon sees reduced selling pressure, more passive buying.
Economists expect no clear stimulus details from NDRC meeting.
Focus should be on NPC Standing Committee meeting for bond issuance approval.
Anticipated 2-10 trillion yuan special bond issuance announcement retracted.
New A-share accounts not trading yet, only transfers seen.
Speculation about national team profit-taking and rotation from A-shares to H-shares.
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