• Significant policy shift: China’s Politburo has announced a series of policy easing measures, including rate cuts and relaxed housing restrictions, aimed at stabilising the economy and reviving sentiment. Regarding fiscal policy, there was no explicit mention of a supplementary budget, but markets remain optimistic for potential additional budgets by the end of October.
• Chinese stocks rebound: Following monetary stimulus and liquidity measures from the People’s Bank of China, the Shanghai Shenzhen CSI 300 Index saw its highest weekly rally since 2008, erasing year-to-date losses and rising 7.9% for the year, fueled by improving market sentiment.
• More optmistic turn on Chinese assets: recent policy shifts are supportive for Chinese equities, but while monetary easing and housing adjustments may stabilise sentiment in the short term, the effectiveness of these measures in reversing economic challenges will depend on the introduction of robust consumer-oriented fiscal policies.
• Views on Chinese equities: Onshore A-shares and select Hong Kong stocks are poised to benefit from policy shifts, with attractive earning yields compared to bond yields, particularly in consumer staples and financial sectors, while caution is advised regarding potential tariff risks and the need for robust fiscal stimulus.

The last week of September has seen a change in the direction of China’s policy mix. China’s Politburo held an unscheduled meeting on economic policies, signalling a clear and urgent shift in monetary and housing policy stances. In terms of monetary policy, the Politburo called for ‘impactful’ rate cuts. It revised ambiguous language on housing, urging a stabilisation in the real estate market. On the supply side, it vowed strict controls on new constructions, to increase loans for ‘white list’ projects, and to support the sale of unused land. On the demand side, it asked to further relax housing purchase restrictions and to lower existing mortgage rates - the latter already enacted by the People’s Bank of China (PBoC) earlier in the week.

You can now read the full whitepaper at the link below