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CHINA: CEWC Readout Begins: Markets Seemingly Disappointed By Lack of Stimulus

CHINA
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USDCNH has weekaned marginally as the CEWC redout begins. However, moves remain modest at thist stage with the cross holding within yesterday's range. Meanwhile, Chinese & HK equity index futures have started to lead global peers lower, seemingly disappointed with lack of immediate stimulus.

  • A reminder that the pre-meeting Politburo language seemed to point towards further stimulus, including the first monetary policy stance tweak seen since '11. The GDP and other annual numeric economic targets are not formally released until March (expect source reports between now and then as they will have been discussed at this gathering). The Politburo readout reduced chances of a mark lower in the GDP growth target and increased the odds of greater fiscal spending.
  • Initial headlines have re-iterated that China will raise its fiscal deficit ratio next year, attempt to keep economic growth stable and to deliver further interest rate cuts at the approrpriate time (as signalled earlier this week).
  • Familiar focus areas here, including property sector mentioned in other headlines, albeit with more forceful support in the offing, as covered above (all bbg):
    • “- CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL INCREASE ISUANCE AND USAGE OF LOCAL GOVT SPECIAL BONDS -CHINESE STATE MEDIA
    • “CHINA WILL 'VIGOROUSLY' BOOST CONSUMPTION, EXPAND DOMESTIC DEMAND 'IN ALL DIRECTIONS'”
    • “CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL STEP UP SUPPORT AND EXPAND THE CONSUMER GOODS TRADE IN CAMPAIGN -CHINESE STATE MEDIA”
    • “CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL LET TECH INNOVATION LEAD DEVELOPMENT OF NEW PRODUCTIVE FORCES -CHINESE STATE MEDIA”
    • “CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL REGULATE BEHAVIORS OF LOCAL GOVT AND COMPANIES -CHINESE STATE MEDIA".
  • Once again, familiar areas of risk and expansion outlined there, these are all knowns/well-documented (all bbg):
    • "*CHINA TO PROMOTE INCOME RISE TO BE IN LINE WITH ECONOMIC GROWTH" - BBG
    • "*CHINA TO DRAFT POLICIES TO PROMOTE BIRTH: CCTV"
    • "CHINA WILL STEP UP RENOVATION OF URBAN VILLAGES, PROMOTE NEW DEVELOPMENT MODE FOR PROPERTY MARKET"
    • "CHINA WILL DEEPEN REFORM OF MECHANISM FOR PROMOTING FOREIGN INVESTMENT AND STEADILY OPEN UP SERVICES SECTOR"
  • Additionally, "CHINA WILL FIRMLY SAFEGUARD BOTTOM LINE OF PREVENTING SYSTEMIC RISKS" - RTRS... Stronger wording around risk prevention at first glance.
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USDCNH has weekaned marginally as the CEWC redout begins. However, moves remain modest at thist stage with the cross holding within yesterday's range. Meanwhile, Chinese & HK equity index futures have started to lead global peers lower, seemingly disappointed with lack of immediate stimulus.

  • A reminder that the pre-meeting Politburo language seemed to point towards further stimulus, including the first monetary policy stance tweak seen since '11. The GDP and other annual numeric economic targets are not formally released until March (expect source reports between now and then as they will have been discussed at this gathering). The Politburo readout reduced chances of a mark lower in the GDP growth target and increased the odds of greater fiscal spending.
  • Initial headlines have re-iterated that China will raise its fiscal deficit ratio next year, attempt to keep economic growth stable and to deliver further interest rate cuts at the approrpriate time (as signalled earlier this week).
  • Familiar focus areas here, including property sector mentioned in other headlines, albeit with more forceful support in the offing, as covered above (all bbg):
    • “- CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL INCREASE ISUANCE AND USAGE OF LOCAL GOVT SPECIAL BONDS -CHINESE STATE MEDIA
    • “CHINA WILL 'VIGOROUSLY' BOOST CONSUMPTION, EXPAND DOMESTIC DEMAND 'IN ALL DIRECTIONS'”
    • “CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL STEP UP SUPPORT AND EXPAND THE CONSUMER GOODS TRADE IN CAMPAIGN -CHINESE STATE MEDIA”
    • “CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL LET TECH INNOVATION LEAD DEVELOPMENT OF NEW PRODUCTIVE FORCES -CHINESE STATE MEDIA”
    • “CHINA'S CENTRAL ECONOMIC WORK CONFERENCE: WE WILL REGULATE BEHAVIORS OF LOCAL GOVT AND COMPANIES -CHINESE STATE MEDIA".
  • Once again, familiar areas of risk and expansion outlined there, these are all knowns/well-documented (all bbg):
    • "*CHINA TO PROMOTE INCOME RISE TO BE IN LINE WITH ECONOMIC GROWTH" - BBG
    • "*CHINA TO DRAFT POLICIES TO PROMOTE BIRTH: CCTV"
    • "CHINA WILL STEP UP RENOVATION OF URBAN VILLAGES, PROMOTE NEW DEVELOPMENT MODE FOR PROPERTY MARKET"
    • "CHINA WILL DEEPEN REFORM OF MECHANISM FOR PROMOTING FOREIGN INVESTMENT AND STEADILY OPEN UP SERVICES SECTOR"
  • Additionally, "CHINA WILL FIRMLY SAFEGUARD BOTTOM LINE OF PREVENTING SYSTEMIC RISKS" - RTRS... Stronger wording around risk prevention at first glance.