Pre-Market Plan [9/24]: China does another round of Big Stimulus to defend Property Sector
Good Morning -
Overnight in Asia, there was a big development from China’s People’s Bank of China (PBOC) where policy makers just unveiled another round of stimulus to support the property sector.
PBOC Governor Pan Gongsheng said at the press conference that the People’s Bank of China will cut outstanding mortgage rates for individual borrowers by an average of 0.5 percentage point. Additionally, the minimum down-payment ratio on second home purchases will be lowered to 15% from 25%.
Homeowners will be also be able to renegotiate terms with their current lenders and they may be able to refinance with a different bank from their primary mortgage. This policy in China was last seen in the global financial crisis in 2008.
It’s likely that policy makers want to ensure meeting growth targets this year, and for now, the most immediate sector to boost to help the GDP narrative is the property sector.
China’s new stimulus and the Fed’s recent jumbo 50BP cut may have a large beneficiary - the Hang Seng - because HSI tends to have a large concentration of financial companies/property developers in their index. Both sectors benefit from the combination of simultaneous PBOC and Fed easing.
The market is heating up for Hang Seng/China stocks again after a long period of consolidation, with HSI soaring 2000 points over the past 3 weeks alone from 17000 to 19000.
I’m going to find ways to make our Community more accessible so that more folks can join as Members as the global rally takes hold. Stay tuned for more.
Key Investing Resource: My primary brokerage Interactive Brokers partners with my content. Visiting their website to see their brokerage platform (genuinely highly recommended) supports our research efforts to give out more premium content to all. They offer 4.8% on idle cash (paid daily) and have great execution on Stocks, Options, and Futures (ES/NQ/HSI).
If you are a public reader and would like to give us a little support to help us continue to provide high-quality analysis for all, please visit IBKR (good execution, good research, advanced capabilities).
