China’s Plunge Protection Team Bought ¥1.8 Trillion In Stocks In 2015
by Tyler Durden
ZeroHedge.com
01/10/2016
There was a palpable sense of disappointment among US traders who woke up this morning, expecting China to have announced another major stimulus – whether an RRR or full-blown interest rate cut – following Saturday’s announcement that after 46 consecutive months of wholesale deflation, not to mention a historic market rout, China had not engaged in another round of monetary, or at least fiscal, and very much self-defeating stimulus.
The mood turned even more sour when the same traders, used to getting bailed out by central banks or nation states, read the tape from the overnight Bloomberg, according to which China’s premier was quoted by Beijing News as vowing that there would be “no more strong stimulus on the economy”.
Just as bad, the prime minister added that China wouldn’t seek strong stimulus or flood the economy with too much money to expand demand, Beijing News quoted Li Keqiang as saying in Taiyuan city.
Li then added that China will try its best to develop new business models and create new drivers for the economy, which naturally is bad news for a market which is used to the old, conventional form of “growth”: throwing trillions in cash at the problem and hoping something sticks.
Finally, and most confusing, was Li saying that China must take concrete measures to ease overcapacity in the steel and coal sectors.
Why this is confusing is that just on Friday, CRI reported that China “will provide full support for the coal and steel sectors, which suffer serious overcapacity, to help them out of their current difficulties, according to an official statement issued Thursday. Since last year, overcapacity in those sectors became a prominent problem due to weak demand at home and abroad and dropping commodity prices on the global market, the statement cited Premier Li Keqiang as saying at a meeting on the topic.”
This, to us at least, sounds like a promise of another bailout and quite contrary to the Beijing News report.
But where things get even more confusing is that despite intervening in the market, as it did on two occasions last week to prop up stocks, the PBOC is now increasingly shifting away from an activist approach toward the Chinese stock market.
The Rest…HERE
