Flurry of weekend announcements and activity from China regulators and PBOC in attempts to shore up domestic property, stock markets and the Yuan itself; How will markets react at Monday’s open and then through the week?
- Measures include easing mortgage rules for home buyers and extending tax breaks, meeting global investors to try and halt outflows, urges domestic institutions to increase stock investments (Friday), scale back outbound bond flows under Bond Connect, cutting stamp duty on stocks, lowering Exchange margin requirements as well as slowing the pace of IPOs. (See below for more detail)
- However, most China analysts are not convinced that reducing friction on property and stock transactions will do much to tackle the underlying issue of a lack of demand.
- On a separate note, commentators noted how tired and lethargic Pres Xi appeared to be at last week’s BRICS Summit in South Africa – where he also inexplicably missed an important business speech he was due to give at the Summit.
- Unsubstantiated rumors on Chinese social media in recent days suggest that Xi is fighting increasingly bitter power battles within the CCP and the PLA, on top of China’s mushrooming economic problems, with Xi himself reportedly aloof and difficult to deal with.
** Details on China weekend news releases:
- China said to issue nationwide guidance rules to ease mortgages for some home buyers; Proposes that local governments can scrap a rule that disqualifies people who’ve ever had a mortgage, even if fully repaid, from being considered a first-time buyer.
- China Securities Regulatory Commission (CSRC): China urges longer-term funds to help stabilize stock market - meeting with state pension fund, big banks and insurers
- China PBOC confirms guidance on relaxing residential housing loans
- China Securities Regulator (CSRC): To slow the pace of IPO's at the current stage; Exchanges to lower margin requirements, and will further regulate stake reductions.
- China CSRC said to meet global investors in bid to halt outflows; PBOC reportedly asked domestic lenders to scale back outward bond investments under the Bond Connect scheme
- China Finance Ministry confirms to cut stamp duty on domestic stock trading by 50% from Aug 28 (weekend update)