China’s long-term economic strategy revealed at the Third Plenum has left stock investors wanting, as traders await more detailed guidelines in the coming weeks. The statement, released late Thursday, indicated that Beijing will continue its pursuit of “high-quality development,” but it lacked specifics on any major stimulus to boost demand or address the property market slump.
Chinese stocks have struggled this year, with weak growth and consumer demand. The CSI 300 Index dropped by up to 0.8% on Friday before recovering slightly, while the Hang Seng China Enterprises Index fell by about 2%.
Here’s what analysts are saying:
Kaanhari Singh, Barclays Strategist
“The Third Plenum has been a non-event from a cross-asset perspective in China. Without immediate market implications, equity markets are likely to remain volatile. The approaching US elections and the threat of trade wars will keep equity risk premiums high, especially without new fiscal stimulus. Onshore National Team purchases will continue to stabilize stocks.”
Pierre Lau, Citigroup Analyst
“We see high policy continuity from China’s leadership, with no major changes to our sector and stock recommendations. More details are expected next week, but we maintain our preference for global-economy-driven sectors like exporters and commodities, especially gold, rather than domestic consumption or property sectors.”
Wendy Liu, JPMorgan Strategist
“The Third Plenum Communique aligned with our expectations, and we anticipate follow-up measures from the Politburo meeting next week. We identify digitalization as beneficial for enterprise software, anti-corruption policies as challenging for luxury consumption, support for innovation aiding semi equipment and innovative drugs, and new urbanization initiatives requiring more housing inventory.”
James Wang, UBS Strategist
“The plenum emphasized long-term objectives of multifaceted reforms and high-quality development. More details are expected in the coming days. While the communique’s high-level directions are encouraging, investors need more specifics before acting. Recent investor discussions suggest muted expectations, anticipating a continuation of current policies.”
Yang Tingwu, Partner at Fujian Tongheng Investment
“The statement aligns with expectations, though milder in tone. It reaffirms adherence to Deng Xiaoping’s market economy path, rather than a planned economy. The mention of optimizing underperforming sectors, particularly the property market, stresses new productive forces.”
Gary Tan, Portfolio Manager at Allspring Intrinsic Emerging Markets Equity
“This signals that China will stay on its economic reform path. We await the full document from the Central Committee for more policy details.”
Ken Cheung, Chief Asian FX Strategist at Mizuho Bank
“The emphasis on high-quality growth implies no expansionary policy for growth quantity. The brief mention of property market risk management offered no new measures for stabilizing the housing market.”
Gary Ng, Economist at Natixis SA
“The communique offers no new substance beyond the existing policy trajectory. Any hope for major stimulus is dashed, leaving market concerns about economic growth unresolved.”
