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No Pan-acea
The price of money's irrelevant if there's no demand for it.
By appearances, officials in Beijing still haven't come to terms with that.
When PBoC chief Pan Gongsheng scheduled a policy briefing for Tuesday, it was obvious rate cuts were in the offing. The last such briefing from Pan was in January, when he pre-announced a reduction to banks' cash reserve requirement. He tipped another such reduction today, and a whole lot more besides.
But "more" won't be "enough." Not for an economy laborin
It is quite the extensive package of stimuli, gotta give Pan that. Lower policy rates, lower borrowing rates, lower mortgage rates, lower mortage downs, two equity buying schemes, and additional capital for the big state banks. Xi can’t say his new-ish PBOC head isn’t trying. Analyst reaction in media seems to be “most aggressive stimulus since pandemic” but “more fiscal stimulus needed”, e.g. Reuters’ quicktake, so they are trying to tell Xi about string-pushing, but maybe he reads People’s Daily. Chinese market participants seem to like it, but some are just following orders and others are algos.
What must it be like for independent banks in China – rates down, no demand, the big state banks get all the capital. Probably a naive question and someone will inform me there is no such thing.
I haven’t seen a gap up like the one on the MCHI chart today since since the Gamestop yolo yoyo in ’21.