More incentive signals emerged from the press conference that markets were eagerly awaiting. However, the lack of any information on the size of the incentive was disappointing. What does this mean for stock markets and cryptocurrencies?
The press conference that markets have been eagerly awaiting took place. Chinese Finance Minister Lan Foan pledged to significantly increase borrowing to stimulate the economy. The minister did not give any clues about the total size of the stimulus package.
Stating that the government will help local governments solve their debt problems and provide support to low-income people, the minister said the real estate market will also be supported and the capital of state banks will be strengthened.
The size of the expected new incentive package is expected to be determined in the next parliamentary session on the subject. This session is expected to be held in the coming weeks.
Speaking to Reuters, Vasu Menon, general manager of investment strategy at Singapore-based OCBC, said the press conference was positive in terms of determination, but noted the lack of numerical details. “The big fiscal stimulus that investors were hoping for to continue the stock market rally did not materialize,” Menon said. This could disappoint some investors, he said.
“The strength of the announced stimulus plan is weaker than expected. No timetable, no amount, and no details on how the money will be spent have been given. If fiscal policies continue like this, the uptrend in the stock market may end,” said Huang Yan, investment manager at Shanghai-based private fund firm Shanghai QiuYang Capital.
HSBC Asia Chief Economist Fred Neumann said that concrete figures could only emerge by the end of this month, adding, “Investors will need to be patient.”
The world’s second-largest economy is facing strong deflationary pressures due to a sharp decline in the housing market and weak consumer confidence. Economic data in recent months has fallen short of forecasts, raising concerns that this year’s 5% growth target may not be met and that China may be entering a long-term structural slowdown. September data is expected to be even weaker next week, with Zheng Shanjie, the chairman of China’s National Development and Reform Commission, saying he was “fully confident” the target would be met.
How will cryptocurrencies be affected?
Bitcoin had risen above $63,400 hours before the meeting this morning. High expectations for the meeting caused the price to experience a significant increase in a short time. In the upcoming process, as in all markets, cryptocurrency investors are also looking at developments in China. The last press conference, which was followed with the expectation that China would announce a large and new incentive package, did not meet these expectations. On the other hand, the clarification of the details of the incentive package in the coming days may bring a rally in the cryptocurrency market, depending on the size of the package.
