(Bloomberg) -- China’s latest debt swap plan disappointed stock investors, with market watchers now turning their focus to upcoming policy meetings for further stimulus clues.
The debt program came in at the lower end of expectations, according to analysts. This week’s high-profile legislative meeting also failed to provide fiscal stimulus to bolster consumption, which many say would have a more direct and immediate impact on economic growth.
Futures on the FTSE China A50 Index fluctuated following the announcement, while the onshore CSI 300 Index closed 1% lower and a gauge of Chinese firms listed in Hong Kong lost 1.1%.
Here is what analysts are saying:
Dai Yuzhong, a fund manager at Shanghai Shinyu Private Fund Management Co.
- “This is the lower end of expectations, but I think the authorities are well aware of the challenges we are facing in the economy”
- The measures are “not going to kick start a new round of investment, especially boding ill for the high growth and tech sectors the market has been betting on lately”
Homin Lee, senior macro strategist at Lombard Odier
- “It appears that the authorities are kicking the can to December policy meetings, including the Central Economic Work Conference. Finance Minister Lan is clearly keeping the door open for bank recapitalization and other central government-level stimulus measures”
- “Even so, the announcement is a letdown and indicative of the underlying conservative framework that reduces the scope for large positive surprises in the next few months
Gary Tan, a portfolio manager at Allspring Global Investments:
- “The debt swap quantum and time period suggest that the China government is keeping some stimulus gunpowder dry ahead of the Trump administration next year”
- “There should be some initial disappointment from the market on the lack of a “combo” stimulus announcement”
- “We expect follow up policies to be announced by China as they get more clarity on the economy policies of the Trump administration”
Chunai Jean, senior strategist at Daiwa Asset Management
- “All in all, no positive surprises at all”
- “Next week, I think there is a strong possibility that the selling will dominate once again. We still do not expect the fiscal spending measures to have an effect of boosting the economy, and with the sense that the market is running out of positive materials, it’s difficult to expect the upside”
- “The next events to watch are the two meetings. One is the Politburo meeting in November and the other one in December — Central Economic Work Conference”
- “However, the government’s actions since late September don’t suggest that it is very serious about economic stimulus measures”
--With assistance from April Ma, Abhishek Vishnoi, Winnie Hsu and Sangmi Cha.
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