Hang Seng, China's CSI pare gains on no stimulus by China's top body: Top highlights of briefing

People cross an intersection near the central business district (CBD) in Beijing, China October 7, 2024. REUTERS/Florence Lo

China’s National Development and Reform Commission pledged more measures to boost the Chinese economy, however stopped short of a fresh stimulus, disappointing investors and sending the mainland benchmark index CSI 300 and the Hang Seng sharply lower from early highs.

The National Development and Reform Commission (NDRC) is a central body in China with high-ranking officials, aimed at devising and implementing policies to manage the economy. Its scheduled briefing on Tuesday was widely awaited, in anticipation of more measures to support the targetted growth rate of 5% for the year.

Here's some key takeaways from the press briefing, widely-tracked across Asia for cues.

-The commission officials has expressed confidence at achieving the full-year growth target of 5% set by the Politburo, however, the external risks and pressure on the economy both have risen.

-The commission said the next set of measures by China will focus on boosting domestic demand, and support real estate and capital market, without further detailing what these measures are likely to be.

-The Chinese establishment will also take measures to attract more foreign direct investment, said NDRC.

-Officials of the NDRC said in the future, it will increase direct support for disadvantaged groups like orphans, and fresh graduates. A one-time subsidy was announced ahead of last week's the National Day Holiday.

-NDRC has also promised to front-load $14.1 billion allocation from 2025 budget for strategic construction projects.

-Bond issues will be planned to revitalise land use, and curbs on house purchases will be tweaked, said NDRC, to improve housing demand.

-The NDRC also said China will seek private capital for urban projects through the public private partnership route, and REITs.

-China will continue with its ultra-long sovereign bonds in 2025 and invest $14 million in strategic areas, the commission said. China has aimed to for a 5% growth rate this year, however recent data has shown sluggish consumer spending and a persistent slump in property prices.

Analysts expressed disappoint over the lack of concrete measures. "Even worse, they talked about frontloading from 2025, so no new money. Basically, they have created a bubble, but they are not ready to feed it further with fiscal stimulus, and bubbles need that," South China Morning Post quoted Alicia Garcia-Herrero of Natixis.

Some analyst said there is still a possibility of some kind of stimulus announcement by the Ministry of Finance later this month.

Bloomberg quoted Aleksey Mironenko​​​​ of Leo Wealth, who said the sustainability of the rally will depend of actions. "The key thing we are watching going forward — what policies will be announced in coming weeks following the Politburo and State Council statements? That will determine if our overweight is a tactical one — to be taken off as relative valuations change – or a strategic one," Mironenko said.

Indian metals stocks slipped sharply after the press briefing, partly due to no new stimulus by China and a drop in SGX iron ore prices.