China’s finance minister plans a briefing as investors look for stimulus

(Bloomberg) — China said it will hold a fiscal policy briefing on Saturday as investors look for additional measures to boost the world’s second-largest economy.

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Finance Minister Lan Fo’an will introduce measures to strengthen fiscal policy to support economic growth and answer questions from reporters, the State Council Information Office said in a statement on Wednesday. The briefing will start on Saturday at 10 local time.

The announcement came as China’s stock market rally lost momentum after its economic planning agency announced weaker-than-expected stimulus measures in the first government briefing after a week-long holiday.

“Markets continue to oscillate between disappointment and hope for fresh, meaningful fiscal stimulus that would have a bigger impact on business sentiment and employment,” said Fiona Lim, senior currency strategist at Malayan Banking Bhd. “That said, the sense of urgency at the top level is clear and recent monetary and housing easing measures have also been considerable. As such, it pays to be cautiously optimistic at this stage.”

China’s CSI 300 index pared losses on the news. The country’s 30-year government bond futures erased gains of up to 0.8 percent on speculation that the nation could announce fiscal stimulus at the briefing. The offshore yuan extended a gain to trade 0.2 percent stronger.

Equity investors have been looking for higher fiscal spending to stem a slowdown that threatens to put the country off target for 2024 growth of about 5 percent. Many are expecting an announcement from the Finance Ministry, usually tasked with issuing bonds to support stimulus measures, after the National Development and Reform Commission disappointed on Tuesday by announcing that it had not announced major steps in favor of growth after the long national holiday.

“This is a high-profile briefing as fiscal policy has been the focus of the market,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc. “The projects announced by the NDRC can only be financed by the Ministry of Finance. launched and monetary easing have an impact on the real economy,” he said.

Banks including Morgan Stanley and HSBC Holdings Plc are expecting a 2 trillion yuan ($283 billion) stimulus, while Citigroup Inc. set the amount at 3 trillion yuan. Economists have speculated on measures such as support for financing local public administration, infrastructure investment, an increase in consumption and recapitalization of banks.

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In a nod to private sector and investor concerns, Chinese Premier Li Qiang vowed on Tuesday to “listen to the voice of the market” when formulating economic policies. His remarks echoed recent calls by China’s ruling Politburo to “face difficulties head-on”, underscoring Beijing’s renewed urgency to shore up confidence after the economy grew at its slowest pace in five quarters.

Just ahead of the Golden Week holiday, the government unleashed a raft of stimulus measures, including interest rate cuts, more liquidity to boost bank lending and a pledge of up to $340 billion to support the stock market. The efforts sent Chinese stocks up about 30 percent.

Adding to the frenzy of actions aimed at stabilizing growth, China’s central bank said on Wednesday it had recently held its first joint meeting with the Finance Ministry on diversifying monetary policy tools and “gradually” increasing the monetary authority’s open-air sovereign bond trading. market.

The People’s Bank of China is reviewing its policy framework, including a move to manage interbank liquidity through bond trading, as it seeks to improve the effectiveness of monetary adjustments in supporting the economy and rein in the risks of bond market speculation.

Authorities will continue to strengthen policy coordination and create an “appropriate market environment” for bond trading by the PBOC, it said.

–With assistance from Yujing Liu, Matthew Burgess, April Ma, Tian Chen, and Iris Ouyang.

(Updates with more details)

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