UBS has recently predicted that China will launch a fiscal stimulus package from RMB 1.5 trillion to RMB 2 trillion. This forecast is expected to help put more money in the nation’s coffers and grow to almost the government’s set at approximately 5% in the current year.
UBS Chief China Economist Wang Tao pointed out that according to market views, stimulus measures must be within the range of RMB 2 trillion to RMB 10 trillion, but a moderate approach may be taken. It is more advantageous for China to prioritize a fiscal package of 15 to 20 trillion Yuan. Moreover, Wang expects fiscal measures next year from RMB 2 trillion to RMB 3 trillion, on previous estimates.
UBS China Evaluates Stimulus Measures and Market Stability
Wang pointed out the necessity of increasing stimulus to stabilize the real estate market, reverse the decline in prices and corporate confidence. This approach will be crucial for sustaining growth at around 5% over the next two years.
UBS analysts expect the announcement of this year’s stimulus measures to occur shortly after the National Day holiday or around the release of third-quarter economic data on October 18. They predict that next year’s plans may be finalized during the Central Economic Work Conference scheduled for December.
Chinese Stocks Respond to Stimulus Optimism
Chinese semiconductor stocks have recently been on an upswing based on expectations of the start of the fiscal stimulus. Market sentiment has greatly enhanced across the market sectors after the announcement of the stimulus measures in China. Some observers think there could be further fiscal measures in the next round, which might come right after the National Day holidays.
Shares in Hong Kong in Semiconductor Manufacturing International Corp, rose by 20%, continuing the 29% increase recorded on Friday. The two-day rally increased the company’s market capitalization by HK$93.65 billion ($12.06 billion). Another competitor, with a much lower market capitalization, is Hua Hong Semiconductor, which has risen slightly over 40% since Thursday.
The semiconductor sector’s gains have contributed to a broader market rally in Hong Kong, with the Hang Seng Index climbing 1.4%. Since the announcement of the stimulus measures, the index has risen 26%. Analysts suggest that with the expected support from Beijing.
