China stimulus bets are again

China’s CSI 300 stock index rose as much as 2.3% today before fading to close up 1.1%. It was the second day of gains but it might be based on flimsy evidence.

So far, the market has been disappointed by Chinese stimulus but hopes are building for more. A report from earlier this week highlighted the possibility of a 25-50 bps RRR cut in December, which isn’t a big surprise.

Eyes are mostly focused on the fiscal side after the October/November numbers were less than hoped.

“There are all sorts of rumors flying around in Chinese social media,” said Nigel Peh, a fund manager at Timefolio Asset Management in Singapore, said in Bloomberg report.

Aside from an RRR cut, some are looking towards a Central Economic Work Conference meeting of top leaders as a time when more could be announced, including a real estate stabilization fund. However another rumor that seemed to gain traction was an unverified screenshot circulated in online showing that the
conference will be held earlier than expected and set the 2025 fiscal deficit
target at a higher ratio.

Buyer beware. But note that Chinese stocks are dangerously consolidating after the big September jump.