New | China markets likely capped in tight range until year end, analysts say
Markets likely to remain unresponsive until China unveils more aggressive stimulus, which might not come until next year, analysts say
China’s latest round of policy easing isn’t likely going to be enough to push stocks higher before year end, according to analysts who cited structural economic headwinds along with signs that the US Fed may be prepared to tighten policy at its December meeting.
Last weekend’s policy easing, which amounted to the sixth interest rate cut unveiled by the People’s Bank of China in a year, was seen by some analysts as helping to insulate mainland stocks from further declines, but short of the policy extremism needed to push prices meaningfully higher.
Hong Hao, chief strategist with Bocom International, said he could not see any significant growth prospects for the A-share market this year.
“We have too much money, but too few investable projects. And slowing but not collapsing growth does not justify quantitative easing from China, as many have been chanting.”
Hong said authorities in Beijing were likely to hold back on big stimulus moves for the time being.
“I do not think the central government is likely to roll out any aggressive policies until next year, simply because there is no need, the PBOC has already pumped ample liquidity to the market, and there is no sign for a hard landing,” he said.
