Markets Shrug Off Latest Stimulative Measures Out Of China

MNI (London) - Markets continue to view Chinese support measures as welcome, but not enough.

• The WSJ ran a piece over the weekend flagging continued opposition to meaningful household-oriented fiscal stimulus, owing to strong beliefs within high levels of the CPC.
• Touted impending deposit and mortgage rate cuts will add to the recent run of stimulative measures (if delivered).
• USD/CNH trades back above CNH7.30, with global equity benchmarks relatively unreactive as participants view such moves as either expected or more of the same.
• CNH forward points have eased, lowering the cost of CNH shorts. Points still comfortably above recent lows after touted policymaker efforts re: reducing CNH liquidity.
• Chinese equity benchmarks are also off recent lows, although rallies remain contained.
• Offshore participants have been net sellers of mainland equities for 16 of the last 17 sessions (via the HK-China Stock Connect schemes).
• Policymakers will seemingly remain on the defensive, at least in the immediate term.
• The consensus view re: Chinese economic growth for ’23 has been marked lower again but remains in line/incrementally above Beijing’s target of “around 5%.”
• Official PMI data (Thursday) provides the next litmus test, with participants remaining willing to test the will of the authorities.