bullish

CHINA: When Will Stocks Catch Up With Surging Debt Markets?

1.6k Views26 Jun 2024 07:40

Boomeranged on Sat, 27 Jul 2024 07:30

The PBOC cut the 1YR MLF rate and 7 day Reverse Rep (the new benchmark rate) while commercial banks cut their 1 year and 5 year LPR's. Concurrently China's 5 largest state-owned banks said they would cut deposit rates between 5-20bps. Yesterday's 10 CGB yield fell to a record low of 2.17%. The stronger JPY and weaker dollar have allowed more room for easing as the CNY strengthened this week.

SUMMARY

China's debt markets are experiencing an historic bull cycle as government and companies take advantage by ramping up issuances this year.
Beijing will use its healthy balance sheet and continued debt issuance to clean up local government debt and simultaneously address the property sector problems.
China's healthy external position will provide continued support for its currency and debt markets with equity markets to follow in the coming months.

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