Chinese Firms Pop on Stimulus

A slate of great economic data is getting supercharged by government money printers

BREAKING NEWS

U.S.-listed Chinese stocks are booming thanks to the 1-2 punch of great economic data and government stimuli. Let’s break down China’s road to recovery.

WHAT HAPPENED

First up, China reported their biggest industrial expansion since 2021. Industrial output surged 6.6% nationwide in November, which smashed expectations of 5.6%. Given that output only rose 4.6% in October, this is a great result. Retail sales missed estimates by ‘only’ climbing 10.1%, but that rise is compared to the extreme low point of Chinese lockdowns last year.

Urban investment for 2023 so far managed to rise 2.9%, while unemployment in China held firm at 5%. It should be noted that even though that 5% number is really high, there are many analysts who have raised concerns that the Chinese government is actually undercounting unemployment numbers. Either way, most economic data is pointing in the right direction.

FULL SPEED AHEAD

Adding to that improving economic picture, China is slamming down the accelerator and pushing even more growth. The People’s Bank of China is giving out $113 billion in one-year loans to commercial lenders. This is a straight-up cash injection that will help businesses grow their way out of this slowdown. Meanwhile, Beijing and Shanghai have also extended mortgage repayment deadlines and made is easier for folks to buy homes in the first place. These efforts should help support a badly struggling housing market in China. 

WHY IT MATTERS

This is a great complement to the euphoria in U.S. markets surrounding the Fed’s potential rate cuts in 2024. Another big risk that could have hampered growth in the U.S. was a deepening recession in China. With the Chinese economy stumbling its way back to growth, folks are way more confident about both economies moving toward recovery together. U.S.-listed Chinese stocks like Alibaba all netted a solid 1-3% bump in their market cap in early trading thanks to this improving outlook.