The People’s Bank of China (PBOC) pumped ¥1.2trn (£130bn) of extra liquidity into money markets on Monday. Banks have been told not to call in loans made to companies in Hubei, the province at the centre of the outbreak. Annualised first-quarter growth could sink as low as 4.5%; in 2019 GDP rose by 6.1%.
The new stimulus is limited for now. It is aimed at keeping the financial system running and offering targeted help to affected sectors and regions, say Chang Shu and David Qu of Bloomberg Economics. But once the virus is contained authorities are likely to shift towards a more general push to revive growth.
What would a new stimulus look like? Analysts are banking on “looser monetary policies to stimulate demand, more subsidies to bolster struggling firms, and a weaker renminbi to goose exports”, write Keith Johnson and James Palmer for Foreign Policy. The latter measure would enrage Donald Trump, who has accused Beijing of currency manipulation. Add in the fact that disruption due to the coronavirus will encourage US firms to redesign their Asian supply chains and the outbreak will “only accelerate” the ongoing “decoupling” of the US and Chinese economies.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Asset managers are already positioning themselves for a new round of stimulus, says Michael Mackenzie in the Financial Times. As well as boosting emerging market equities, any Chinese easing could “move the needle for the global economy”. But “wait and see what kind of stimulus arrives from China” before piling in. It remains to be seen whether all this talk of “buying the dip” is just short-term trading chatter, or whether it marks the start of a brighter period for cyclical stocks.
-
The industry at the heart of global technologyThe semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
-
What are shareholder voting rights and why do they matter?If you hold shares in a company, the chances are they’ll come with voting rights. But how do you exercise your right to vote? And is your fund manager taking it seriously?
-
UK wages grow at a record paceThe latest UK wages data will add pressure on the BoE to push interest rates even higher.
-
Trapped in a time of zombie governmentIt’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
-
America is in deep denial over debtThe downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
-
UK economy avoids stagnation with surprise growthGross domestic product increased by 0.2% in the second quarter and by 0.5% in June
-
Bank of England raises interest rates to 5.25%The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
-
UK wage growth hits a record highStubborn inflation fuels wage growth, hitting a 20-year record high. But unemployment jumps
-
UK inflation remains at 8.7% ‒ what it means for your moneyInflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
-
VICE bankruptcy: how did it happen?Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
