China-exposed assets jumped on Tuesday after Beijing announced its biggest stimulus since the pandemic in a bid to pull the world's second-largest economy...
LONDON - China -exposed assets jumped on Tuesday after Beijing announced its biggest stimulus since the pandemic in a bid to pull the world's second-largest economy out of the deflationary funk that has shaken global currency and equity markets this year.European stocks, emerging-market currencies and commodities lapped up the news, but analysts questioned how effective it would be in the longer run, given extremely weak credit demand from domestic businesses and consumers.
"It remains to be seen if these measures are sufficient to ignite more private sector optimism. History would suggest fiscal rather than monetary measures are more effective." "There, you have an economy that is much less geared to China demand, in Europe this kind of gearing is way more," noted Andreas Bruckner, European equity strategist at Bank of America.
Yet economies geographically closer to China and that have close trading ties with the country could see some tailwinds - as could those holding their domestic government bonds, said Charu Chanana, strategist at Saxo Markets in Singapore. China-sensitive currencies like the euro, Australian dollar and Malaysian ringgit - which has vaulted to three-year highs after Beijing's burst of stimulus - are all likely to gain a foothold against the dollar, as investors favour more cyclical currencies.
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