Reuters’ RMB 10 Trillion Stimulus Article Lifts US-Listed China Stocks Pre-Market

Key News

Asian equities were mixed overnight despite another strong US dollar move against regional currencies, as Mainland China, Taiwan, and the Philippines underperformed.

The most important news item occurred after the market close as Reuters reported the NPC will approve RMB 10 trillion ($1.4 trillion) of fiscal stimulus, the equivalent to 8% of GDP via special bond issuance, sending US-China ADRs higher pre-market. The bond issuance would:

• Be spread out over three years with RMB 6 trillion of “the proceeds primarily being used to help local governments address off-the-books debt risk”
• “4 trillion worth of special-purpose bonds for idle land and property purchases over the next five years”
• A separate RMB 1 trillion “as a consumption boost including trade-in and renewal of consumer goods”
• “Another trillion to bolster banks’ balance sheets”

The Reuters article is based upon “two sources…