Liu He signals desire for stability; Outbreaks; MSS in the US; Ukraine
Markets went nuts after the Wednesday financial stability and development committee (FSDC) meeting chaired by Liu He signaled the government wants stability in financial markets and more clarity in regulatory actions.
The readout shows how worried policymakers have become about the markets, real estate and the economy but I would be cautious in assuming that the messaging from Liu He and other financial regulators means the tough days are over. They are certainly trying to send a signal that they don't want markets to go down more, but is it not clear this a real shift or more of a calibration to stabilize things.
Stability has been the keyword, especially since the December Central Economic Work Conference and at the recent NPC meeting. There does appear to be a course calibration underway, but Xi can course correct, so seeing this as some sort of "pushback" on Xi is problematic in the absence of more evidence.
This chart from the Chief Economist at the IFF is interesting. Maybe these data have Liu He and others in the leadership worried, as foreign capital inflows are still very much needed:
The comments from the FSDC on platform regulations are also interesting, I interpret them more as regulations are here to stay but they will be executed better, rather than there will be a pullback:
As for the platform economy, relevant departments should improve the established plans to govern the sector. They should steadily advance and complete the rectification work on large platform companies as soon as possible through standard, transparent, and predictable regulation, the meeting said.
Both "red lights" and "green lights" should promote the steady and healthy development of the platform economy and improve its international competitiveness
I was a bit snarky in yesterday’s newsletter, but now this JPMorgan call does like the perfect contrarian signal, at least for today:
Congrats to anyone who owns some of these China Internet firms, especially if you bought them Tuesday:
The comments from the FSDC about “regulation over US-listed Chinese firms” helped those stocks today, but as I discuss in item 3 I would be cautious about overexuberance about a possible deal.
Today’s Essential Eight:
Financial stability and development committee signals desire for stability
Deal for accounting of US-listed PRC stocks?
Property tax pilot expansion on hold as real estate needs support
Multiple indictments of MSS actors in the US
Chen Yixin on Peaceful China