Analysts at ANZ Bank New Zealand Ltd explained that China’s State Council announced overnight that it would support bond financing by private firms with central bank funding, though details were scant.
Key Quotes:
“The central bank also announced a higher quota for relending and rediscounting to support private sector lending.”
“Meanwhile there is some scepticism regarding the likely longevity of the sharp rally seen in the Shanghai Composite share index (+6.8% over the past two days), given that the fundamentals appear to still be deteriorating.”
“Investors are likely to remain wary of the unfriendly trend, given the index is down almost 20% so far this year.”
“It’s one factor restraining the Chinese consumer, which is where New Zealand’s direct interests lie.”
“Falling new car sales suggest discretionary spending growth is weakening, which doesn’t bode well for NZ commodity prices, all else equal.”
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