(Bloomberg) -- China’s highly anticipated Finance Ministry briefing on Saturday lacked the firepower that equity investors had hoped for, indicating that the...
-- China ’s highly anticipated Finance Ministry briefing on Saturday lacked the firepower that equity investors had hoped for, indicating that the volatility that’s gripped the market following a world-beating rally will likely extend.While Finance Minister Lan Fo ’an promised more support for the struggling property sector and hinted at greater government borrowing to shore up the economy, the briefing didn’t produce a headline dollar figure for fresh fiscal stimulus that the markets had sought.
A further unwinding of the rally risks fueling concern that equities are heading for yet another false dawn, which may bring more selling pressure. The market has been caught in a start-stop cycle of gains and losses a few times before as Beijing’s piecemeal approach to stimulus produced only brief rebounds.
Inflation data released on Sunday is likely to add to investor concerns. It showed that China’s consumer prices rose less than forecast in September, while factory-gate charges fell for a 24th straight month, underscoring the need for further policy support to help the economy break out of deflation.
Traders will keep waiting for more details after the finance ministry on Saturday used phrases such as “relatively large amount, or relatively large room” to describe the measures, said Frances Cheung, strategist at Oversea-Chinese Banking Corp. A strengthened fiscal push would likely weigh on China’s bonds by encouraging traders to move funds into riskier investments with potentially better returns. An increased supply of debt may also sap liquidity in the financial system, making it harder for the market to absorb the entire amount.
Finance Ministry Fiscal Stimulus Fiscal Measures China Sovereign Bonds CSI 300 Index Finance Minister Lan Fo Equity Investors
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