CLN
Key News
Asian equities cheered the confirmation of the de-escalation in the Middle East and a potential July US interest rate cut, led by Hong Kong, Mainland China, and Taiwan.
China’s markets grinded higher across the trading day on strong volume and breadth. The key catalyst was that six Chinese government agencies announced the release of the “Guiding Opinions on Financial Support to Boost and Expand Consumption” following the State Council’s guidance on expanding “financial support to boost and expand consumption”.
The People’s Bank of China (PBOC), National Development & Reform Commission (NDRC), Ministry of Finance (MoF), Ministry of Commerce (MoC), China Banking & Insurance Regulatory Commission (CBIRC), and the China Securities Regulatory Commission (CSRC) release focused on six topics and 19 key measures to “combine the implementation of the strategy of expanding domestic demand with deepening the structural reform of the financial supply side, increase the investment in the financial resources provided by consumption, and improve the level of financial services for consumer demand“. The measures include:
- Supporting the enhancement of consumption capacity and cultivating consumption demand by encouraging financial institutions to establish pensions for individual workers.
- Setting up a service consumption and pension re-lending program with a quota of CNY 500 billion for loans for key areas of service consumption, to be issued by 21 national financial institutions and five urban commercial banks nationwide.
- Increasing financial support for key consumption areas to help tap and unleash consumption potential.
- Strengthening financial support for consumption infrastructure and circulation system, while promoting consumption supply efficiency.
- Strengthening basic financial services to help optimize the consumption environment.
- Strengthening organizational guarantees.
The NDRC will host a press conference tomorrow on the subject.
Vice Premier He Lifeng was in Hebei to “conduct on-site research on the exchange of old appliances for new ones, real estate development and sales”. Premier Li spoke at the Summer Davos in Tianjin, stating that China’s status as a “super-sized consumption powerhouse” will be upheld. It seems to be a recurring theme!
Hong Kong and Mainland-listed financial stocks had a strong day, led by brokers and insurance as beneficiaries of the push to expand use of the plan to expand and promote personal pensions and annuities. Also helping brokerage stocks was Guotai Junan International, which gained +198% after being approved by Hong Kong’s Securities and Futures Commission (SFC) to allow crypto trading.
Internet stocks had a good day as well, as it was a very broad rally in both markets. Mainland investors bought a healthy $1.22 billion worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect today, as 53% of Hong Kong trading was Connect-related. To me, this continues to show a lack of foreign investor involvement, despite the strong rally since January 2024. The Mainland market is finally showing some animal spirits as 117 stocks hit 52-week highs versus only 4 hitting 52-week lows.
Mainland military stocks outperformed on news that a military parade will be held on September 3rd, celebrating the 80th anniversary of the end of World War II
All told, it was a strong day!
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Last Night’s Performance
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Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.18 versus 7.17 yesterday
- CNY per EUR 8.34 versus 8.34 yesterday
- Yield on 10-Year Government Bond 1.65% versus 1.65% yesterday
- Yield on 10-Year China Development Bank Bond 1.70% versus 1.69% yesterday
- Copper Price 0.14%
- Steel Price -0.54%
