Benzinga - by Piero Cingari, Benzinga Staff Writer.
The Chinese government is contemplating an increase in fiscal stimulus, reflecting a desire to recover a portion of the economic growth that has been lost over recent quarters to achieve the annual growth target of 5%.
That’s according to Bloomberg, citing sources familiar with the situation. Government policymakers are currently weighing the possibility of issuing at least 1 trillion yuan ($137 billion) in additional sovereign debt to fund infrastructure investments, including projects related to water conservation.
No official announcement has been made yet.
These developments have led to a surge in global equity indices. In Hong Kong, shares, as tracked by the Hang Seng Index, saw an increase of 0.8%, and a similar performance was observed by the S&P/ASX 200 in Australia.
Within the Asian region, the Japanese Nikkei Index showed the strongest performance, with gains of up to 1.8%.
Some notable stock gainers in the Asian market included companies like Kawasaki Kisen Kaisha Ltd. (OTCPK: KAIKY) and Miniso Group Holding Ltd. (NYSE:MNSO), both experiencing a 6% increase.
In Europe, stocks also displayed positive momentum, with Italy’s FTSE Mib 30 and Spain’s IBEX 35 indices standing out, both registering a 1.7% increase.
In the European market, Just Eat Takeaway.com NV (OTCPK: JTKWY) rose by 6%, alongside Alstom (OTCPK: ALSMY), which also saw a 6% increase, and TUI AG (OTCPK: TUIFF) with a 5.7% increase.
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Country Garden Issues Default Warning
Ting Meng, a senior credit strategist at Australia and New Zealand Banking Group, told Bloomberg that Country Garden’s recent statement may force offshore bondholders to push forward a restructuring proposal.
The company announced on Tuesday a significant drop of 81% in contracted sales for September compared to the previous year, primarily due to the persistently weak demand from homebuyers in China. This decline caused Country Garden’s shares to fall by 11% in Hong Kong on Tuesday, following a 6.7% drop in the previous session.
Notably, Country Garden’s dollar bond maturing in January 2024 is currently trading at 6 cents on the dollar, while the bond due in 2031 is trading at less than 5 cents on the dollar.
Domestic stocks in China underperformed global equities on Tuesday. The Shanghai Composite index declined by 0.7%, and the Shenzhen Component saw a loss of 0.6%. These losses extended from the previous session.
Chart: Country Garden’s Dollar-Denominated Bonds Tumble
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