2018: China stimulus will disappoint markets

Consensus said:

Investors were expecting a repeat of previous large-scale stimulus to boost Chinese growth, with beneficial spill-over for the rest of the world. 

We said:

Strong market expectations of an old-style credit easing and fiscal stimulus have led to a bigger overall risk appetite in recent weeks. We believe the current market optimism about the China stimulus will be short-lived. The ongoing domestic easing cycle will be weaker than previous ones and this market expectations will not be met. 

Easing is constrained by the elevated debt level and the overheated property sector. As we previously highlighted there is still room for proactive fiscal policy in H2/18. But recent policy statements, including that ordering the acceleration of local government special bond issuance are all part of the current quotas, which were announced during the NPC plenary session in March. So, it is merely a case of catching up with the fiscal plan for the full year and does not consitute additional stimulus. 

Outcome:

Recovery of total credit growth has remained modest. China has not relaxed it's macro prudential stance nor supported the housing market.  Investors have lowered their growth expectations for China. 

Economics

02 Feb 2005
01 Sep 2004
12 Aug 2004
05 May 2004
20 Jul 2000
01 Apr 1999
06 Jan 1999
01 Sep 1997
06 Jun 1995
10 Feb 1994
10 Mar 1993
06 Feb 1992
10 Dec 1991
03 Jan 1990

Politics

Markets

15 Apr 2016
16 Oct 2015
25 Nov 2013
20 Dec 2012
20 May 2004
03 Jul 2001
VIDEO

Video

View our summary videos on fast trending topics. To listen to a recording of our Conference Calls, please get in touch with zdl@tslombard.com

READ MORE
TRACK RECORD

Track Record

We have a 30 year track record of successful calls. Many of these calls combined economic, political and market analysis.

READ MORE
PRESS

Press

To request an interview with a member of our team, please get in touch zdl@tslombard.com .

READ MORE

Menu

Client Login


Don't have an account? CREATE YOUR ACCOUNT
TRIAL