China’s National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) held in March are expected to continue to implement a stable monetary policy tone, and the market is not expecting any rate cuts or interest rate cuts in March. Looking at the next three months, interest rate cuts are still expected to be frozen, and the idea of a possible rate cut is slightly on the rise in terms of quantitative tools, although the current ratio is extremely low, at about 2% not yet a climate. Chinese stocks closed lower on Thursday, with the CSI 300 index falling the most in more than seven months, as investors sold off consumer and raw materials stocks on concerns about overvaluation.
China’s CSI 300 index closed down 3.2%, the biggest one-day drop in more than seven months, Reuters reported today.
The Shanghai Composite Index closed down 2.05 percent at 3,503.49 points. The CSI 300 index closed down 3.15 percent, the largest one-day decline since January 2020. The CSI 300 major consumer index closed down 4.91%, while the raw materials sub-index fell 4.82%. Technology stocks also fell, with the GEM index closing down 4.866%. The SSE Tech 50 constituent index closed down 2.59%.
Investors are rotating out of consumer, new energy and technology stocks as valuations raise concerns and adding to undervalued property, banking and insurance stocks, said Yang Delong, investment manager at Qianhai Open Source Fund.
The Shenzhen Composite Index closed down 2.9 percent, the news said.
Reuters reports that the National People’s Congress will open on Friday and that a report from Singapore’s UOB expects China to set no specific target for this year’s growth, as it did last year; the bank forecasts China’s GDP growth to reach 8.5% in 2021 due to a low base effect, while the long-term implied GDP growth target is believed to be between 4.5-5.0%. The report said China’s GDP growth this year will be very high due to last year’s low base effect, so whether or not a growth target is set for this year is not important and will not be an indicator of growth in future years.
According to the report, the third China Fixed Income Market Outlook Survey 2021 expects China to hold the “two sessions” of the National People’s Congress and the Chinese People’s Political Consultative Conference in March, and monetary policy is expected to continue to implement a stable tone, with no market expectations for any rate cuts or reductions in March. Looking at the next three months, the expectation of interest rate cuts remains frozen, and the idea of a possible quota cut has been slightly raised in terms of quantitative tools, but the current ratio is extremely low, only about 2% is not yet a climate.
Under the stable policy expectations, the interviewed institutions on the March bond market view is relatively calm, previously believed that the central bank has a tightening attitude triggered by the anxiety has been significantly eased.
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