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Chinese internet stocks are viewed as a buying opportunity despite recent corrections, while concerns linger over the effectiveness of Beijing's stimulus measures amid a slowing economy. UBS's Mark Haefele notes that the lack of new consumption-boosting initiatives may lead to volatility in Chinese equities, especially with potential tariff impacts from the US. Defensive sectors are favored in the current climate, as the market awaits clearer fiscal strategies and responses to external pressures.
Chinese internet stocks are viewed as a buying opportunity despite recent corrections, while concerns linger over the effectiveness of Beijing's stimulus measures amid a slowing economy. UBS's Mark Haefele notes that the lack of new consumption-boosting initiatives may lead to volatility in Chinese equities, especially with potential tariff impacts from the US. Defensive sectors are favored in the current climate, as the market awaits clearer policy direction.
Stock futures dipped as major indexes prepare to conclude a week of post-election gains, with the Dow up 4%, S&P 500 rising 4.2%, and Nasdaq increasing 5.6%. Wall Street anticipates a Trump presidency will foster a more favorable regulatory environment, boosting M&A activity, particularly in pharmaceuticals, finance, and media.In China, a significant 10 trillion yuan ($1.4 trillion) package has been announced to tackle local government debt, aimed at alleviating financial pressures and promoting economic growth, with further support expected next year.
The People’s Bank of China, led by Governor Pan Gongsheng, has reaffirmed its commitment to a supportive monetary policy, emphasizing an increase in counter-cyclical measures to address short-term economic challenges. This announcement comes during a meeting of the National People’s Congress Standing Committee, which is expected to approve additional fiscal stimulus. Following recent interest rate cuts aimed at bolstering slowing growth, the central bank's stance aligns with global trends as the U.S. Federal Reserve also shifts towards easing.
Asia-Pacific markets are mixed as investors await the Fed's decisions, while China's services sector shows robust growth with a PMI rise to 52.0 in October. South Korea's inflation eases to 1.3%, prompting a recent interest rate cut by the Bank of Korea. Meanwhile, crude oil prices increase over 2% as OPEC+ delays production hikes.
China's anticipated fiscal stimulus plans may hinge on the outcome of the U.S. presidential election, with analysts predicting a larger package if Trump wins. Local governments face challenges due to strict tax enforcement, impacting business activity, while the central government focuses on addressing local debt. Despite potential support, consumption stimulus is expected to be more property-focused, with market volatility influencing the scale of any announced measures.
The IMF has downgraded China's growth forecast to 4.8% for this year, citing a worsening property market as a significant risk. The report warns of potential further price corrections and reduced consumer confidence, despite recent government measures aimed at stimulating the economy. China's GDP growth for the third quarter was reported at 4.6%, slightly above expectations, but concerns remain over the sustainability of these support measures and their impact on public finances.
Chinese markets have surged following government stimulus measures, including interest rate cuts and increased liquidity support, with the CSI 300 index rising approximately 22.5% in a month. Jason Hsu, founder and CIO of Rayliant Global Advisors, will discuss investment opportunities in China, focusing on technology and artificial intelligence, during CNBC Pro Talks on October 23. His Rayliant Quantamental China Equity ETF has gained around 22% year-to-date, with top holdings in Ping An Insurance, Midea Group, and BYD.
China plans to significantly increase central government debt issuance to stimulate its economy, while investors await more details on stimulus measures. Despite mixed inflation data, the Federal Reserve is expected to cut rates, supporting equities into next year. Additionally, geopolitical tensions and fundamental supply-demand dynamics are likely to bolster oil and gold prices, making them valuable portfolio hedges.
Lan Fo’an
People
The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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