The National People's Congress (NPC)- China's top most branch of the People's Republic of China, will hold a briefing at 1:30pm India time on November 8, after concluding its five-day meeting of the Standing Committee.
Investors across Asia and world over will be closely watching for details of a possible stimulus that could lift the yuan, and reveal insights into China's policy positioning after Trump's electoral victory, which has raised the spectre of some tariff-related actions once he assumes charge at the White House.
Anticipation of a Large China Stimulus
Reuters had reported that the National People's Congress Standing Committee may clear a fiscal package including the issuance of 10 trillion yuan ($1.4 trillion) in extra debt in the next few years to revive the economy. China’s bond traders will be looking for the cues coming out of the legislative meeting where lawmakers were expected to discuss the fiscal package.
The Trump Factor
There is an anticipation of some kind of economic support which may cushion the impact from a second Trump presidency on Chinese exports, in case there are tariff-related measures in the offing, as has been hinted by Donald Trump during his campaign trail. The President-Elect has warned of a up to 60% tariffs on US imports of Chinese goods.
Trump's victory is "not necessarily bad for China as this may 'pressure' Beijing for a bigger stimulus", AFP News quoted Qi Wang, CIO of UOB Kay Hian Wealth Management.
China Stocks: Best Week in a Month
China and Hong Kong stocks dipped on Friday, but were on track for their best week in a month as investors await details of Beijing's fiscal stimulus, which some expect will be more forceful in the face of tariff threats from US President-elect Donald Trump. Investors may also closely track what the NPC has to convey to the financial markets.
Street View
"There are a large number of permutations of how China's fiscal package will look like, such as how the bond proceeds will be allocated, and whether the full figure of the multi-year package will be announced on Friday", Reuters quoted Alvin Tan, strategist at RBC Capital Markets.
"Any potential stimulus size may be bigger, but so is the pressure," AFP News quoted Gary Ng, senior economist at Natixis.
According to Chinese media reports, the parliamentary meeting has reviewed the local governments' debt issuance limit. Nomura projects that 50-60 trillion yuan ($7-$8.4 trillion) may be unlocked through increasing this hidden debt.
Indian Markets Subdued
Last month, China's stimulus measures led to a sharp outflow of some foreign funds in India, as investors moved money to rebalance allocations to their EM portfolio. This Friday, Indian benchmark indices Nifty and Sensex are trading soft, with deeper cuts in broader markets.
The People’s Bank of China has already cut key rates, and nay hike in debt relief and government spending will require approval by the National People’s Congress.
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