SPLASH THE CASH
The meeting came the same day Bloomberg reported that Beijing was considering pumping more than US$140 billion into the country’s large state-run banks, in the first major capital injection of its kind since the 2008 global financial crisis.
The measure – aimed at giving the banks more room to lend to businesses – will be implemented mainly through the issuance of “new special sovereign bonds”, the report said, citing sources familiar with the matter.
The details have not yet been finalised, it added.
The slew of moves announced this week, which include key rate cuts and policies intended to encourage home purchases, have been welcomed by investors as stocks in Shanghai and Hong Kong rally.
But analysts warn that more fiscal stimulus is needed to get the economy back up to full speed, as leaders continue to seek ways to achieve this year’s official growth target of 5 per cent year-on-year.
Recent economic data has been disappointing, with second-quarter growth coming in lower than expectations at 4.7 per cent.
Youth unemployment climbed in August to 18.8 per cent – its highest level this year – according to official figures released last week.
This week’s stimulus measures represent a “shift towards a more aggressive easing stance, given the sustained weakness in domestic growth”, said Chaoping Zhu, global market strategist at JP Morgan Asset Management.
“The sense of urgency may convince investors that more policy support is on its way,” added Zhu.
