A more aggressive interest rate policy from the BoJ could stimulate demand for the Japanese yen, which could put pressure on export stocks listed on the Nikkei Index. A stronger yen could reduce contributions from foreign earnings, impacting corporate profits.
China’s stimulus measures cannot boost confidence
On Thursday, China’s Central Economic Working Conference (CEWC) outlined measures to support the Chinese economy. The measures include a higher budget deficit, looser monetary policy and issuing more debt. Thursday’s announcement followed the Politburo’s pledge to introduce fiscal stimulus aimed at consumption and broader domestic demand.
However, experts expressed doubts about whether the measures would meaningfully stimulate consumption.
Commenting on Beijing’s latest round of stimulus, Brian Tycangco, editor/analyst at Stansberry Research, said:
“The Chinese economy is weak, but not catastrophically weak. Trying to figure out the minimum stimulus measures needed to keep the economy going. Ownership is weak in large part because they (Beijing) want it to be weak. What should increase is consumption, but it is not doing so well. You cannot stimulate consumption with one-off vouchers.”
The Kobeissi letter made a comment on Chinese consumer confidence, saying:
“Even as hundreds of billions of dollars of stimulus have begun, Chinese consumer confidence is terrible. Over the past three years, consumer confidence in China has fallen by about 50 points. Such a decline in consumer opinion of the Chinese economy has almost never been seen before.”
Concerns about the failure of the stimulus measures to stimulate consumption and broad demand weighed on the markets of Hong Kong and mainland China.