BEIJING- Liquidity in China’s banking system would be kept reasonably ample, an official said during a press conference by the state planner on Friday that left investors dismayed by slow roll out of support for an economy that has lost its post-pandemic bounce.
Anticipation was riding high for some positive news from three press conferences convened this week by the National Development and Reform Commission (NDRC), after a meeting of the ruling Communist Party’s Politburo on July 24 fanned hopes that stimulus measures were on the way.
Investors in China’s stock markets, however, were clearly underwhelmed, as Hong Kong’s Hang Seng Index dropped roughly 2 percent over the week, while the mainland’s benchmark CSI 300 index eked out a 0.7 percent gain.
Share prices came off early highs after the conclusion of Friday’s press conference, as the most positive takeaway was a reassurance from a central bank official that reductions in banks’ reserve requirement ratio (RRR) were still on the table.
“The reserve requirement ratio cuts, open market operations and medium-term lending facilities (MLF) and other structural monetary policy tools… need to be coordinated and flexibly used,” said Zou Lan, head of the monetary policy department at the People’s Bank of China (PBOC).
But investors are becoming frustrated by the time the NDRC is taking to flesh out stimulus policies, or order measures like a cut in stamp duty – that could help China’s ailing property sector, and please investors in stocks and bonds.
Ahead of similar press conferences on Monday and Tuesday, the NDRC released proposals to expand consumption in the automobile, real estate, and services sectors as well as to improve the business environment for private firms. But little in the way of detail emerged from news conferences.
“While the tone is supportive, these are mostly high-level measures without granularity and reiterations of what authorities had said before,” UBS analysts said in a note.
“The joint briefing has likely disappointed some local investors, who held very high hopes (going) into the meeting, expecting to see strong measures like a stamp duty cut to boost the capital market.”
