Investors look past Beijing’s debt clean-up plan as minister pledges more proactive policy – Technologist

“The market should not be disappointed by the additional 6 trillion yuan debt swap,” said Wang Qi, the chief investment officer of UOB Kay Hian’s wealth management division in Hong Kong. “This is not a small number and there may be more to come.”

“The massive debt swap plan means a shift in policies, and there’ll be more upside room for the fiscal deficit next year,” said Wu Gang, deputy head of research at HSBC Jintrust Fund Management in Shanghai. “We’ve also observed a noticeable improvement in government spending since September. It’s foreseeable that loose government expenditure is on the way in the fourth quarter. Therefore, there’s a big chance of a pickup in China’s economy.”

Larry Hu and Yuxiao Zhang from investment bank Macquarie acknowledged that investors were disappointed with the size of the programme to clean up local government debt. But they said expectations for a “massive fiscal package” were unrealistic, “because the policy goal is to achieve the GDP growth target and reduce tail risks, not to reflate the economy in any meaningful way”.