China announced a new fiscal stimulus policy on the 8th, increasing the debt ceiling for local governments to 6 trillion yuan to replace existing hidden debts. At the same time, starting from 2024, there will be an annual addition of 800 billion yuan in local government special bonds for five consecutive years to supplement government funds for debt repayment, with a cumulative replacement of hidden debts reaching 4 trillion yuan, making the overall fiscal stimulus scale reach 10 trillion yuan.
However, on the first trading day after the policy was introduced, although the three major A-share indexes rose, the overall increase was not as significant as the market reaction after the real estate policy was released at the end of September, and there was no similar celebratory market trend.
Yesterday (11th), the three major A-share indexes all rose, with the Shanghai Composite Index up 0.51% to close at 3470.07 points; the Shenzhen Component Index up 2.03%; and the ChiNext Index up by 3.05%. The number of individual stocks rising in the overall market exceeded 3,900, and the total turnover of the Shanghai and Shenzhen stock markets reached 2.5 trillion yuan. However, compared to the market surge caused by the new policy stimulus at the end of September, the market reaction this time was relatively calm.
At the opening today, the three major A-share indexes briefly rose but quickly fell back. As of the deadline, there was a slight rebound, with the Shanghai Composite Index down 0.06% to 3467.92 points, the ChiNext Index up 1.78% to 2435.11 points, and the Shenzhen Component Index up 1.02% to 11504.37 points.
Although the new round of fiscal stimulus policy did not significantly boost the market, authoritative experts emphasized that China’s monetary policy will continue to maintain a supportive stance. The expert stated that the intensity of this year’s monetary policy is the highest in recent years and has been widely recognized by the market. It is expected that the supportive tone of monetary policy in the short term will not change, and next year’s monetary policy is expected to maintain a strong intensity, providing a good monetary and financial environment for stable economic growth and high-quality development.
Taking into account changes in the macro environment, index structure, transaction distribution, and technical indicators, China International Capital Corporation pointed out that:
Looking ahead to China’s future policy direction, recently, Yi Gang, Governor of the People’s Bank of China, delivered a report on the financial work situation at the 12th meeting of the Standing Committee of the National People’s Congress, outlining the key areas of work for the People’s Bank of China in the future. The main directions of work in the report are as follows:
1. Strengthening the adjustment intensity of monetary policy to support stable economic growth.
2. Strengthening financial supervision to effectively enhance supervision.
3. Continuously improving the quality and efficiency of financial services to support high-quality economic development.
4. Deepening financial reform to accelerate the construction of a modern financial system with Chinese characteristics.
5. Preventing and resolving financial risks to maintain financial stability.