6)Fiscal Outlook:
Due to tight local government finances and the need to manage debt risks, the central government might increase leverage in 2024, potentially pushing the fiscal deficit ratio beyond 3%.
7) Real Estate Projection:
Anticipated transition in property sales from a bottom-finding phase to stabilization in 2024, with a potential slight recovery in Q4, yielding an annual growth rate of about -5%. Notably, the "Golden March" and "Silver April" months traditionally witness increased real estate transactions.
8) Stock Market Analysis:
China's stock market exhibits stronger upward potential than downward. With the Shanghai Composite Index at 3,000 points, above its long-term support line, the current stock-bond ratio is at a historical high, indicating higher cost-effectiveness in stock investment.
Graph: At present, the price-performance ratio of stocks and bonds is at a historical high.
SSE Composite Index $SSE Composite Index (800146.HK)$
Stock-bond ratio
9) Bond Yield Dynamics:
China's 10-year government bond yield, initially at a low, has experienced a gradual increase. Influenced by economic fundamentals and central bank policies, short-term fluctuations may result from sentiment and funding conditions. In the broader outlook for 2024, the 10-year bond yield is foreseen to follow a pattern of commencing at a low and subsequently rising. The early phase benefits from accommodative liquidity under stable growth monetary policies, while the later phase corresponds to an increase aligning with accelerated nominal economic growth.
10)
1. Yuan Appreciation Trend: The Chinese yuan (CNY) is expected to strengthen against the US dollar (USD), approaching 7 in 2024.
2. Economic Outlooks: China's economy is poised for continued recovery, while the US is anticipated to slow down due to the Federal Reserve's interest rate cuts.
3. Interest Rate Differential: The widening interest rate gap between China and the US is a key driver for CNY appreciation.
4. Potential Downside Factors: Economic downturns in Europe and Japan or a significant global risk event could strengthen the US dollar, impacting the CNY exchange rate.
5. Political Considerations: Political tensions between the US and China, particularly during a presidential election, might influence the CNY exchange rate.
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Trade2Swing : I just wonder, when would the Real Estate issue would be resolve and do you think the Real Estate issue the biggest barrier for China to soar higher in the market? Is China still in the deflation state?