Archives of “February 3, 2020” day

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China reportedly considers lowering 2020 growth expectations due to coronavirus hit

  
Analysis, Economy

Bloomberg reports, citing people familiar with the matter

China

The report says that Chinese officials are evaluating whether the target for economic growth this year – touted to be ‘around 6% growth’, should be softened as part of a broader review of how the government’s plans will be impacted by the new coronavirus outbreak.

Adding that officials are also considering more measures to bolster the economy, although final decisions on the above matters have not been made.
I reckon the date to watch for any official changes to China’s economic target and plans will come via the National People’s Congress, which is to begin on 5 March.
But given the situation surround the coronavirus outbreak, we’ll have to see if the session will progress according to schedule or not – should things not calm down by then.

OPEC+ said to be considering additional 500k bpd oil output cut due to virus impact

  
  Analysis
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Reuters reports, citing two unnamed OPEC sources on the matter

The sources say that most OPEC members agree on the need to cut oil output further and that they are considering to have a meeting on 14-15 February now. Just one to keep in mind as such a move may provide some relief to oil prices in the near-term.

That said, once again it will be an issue on compliance to see how effective these cuts are. Oil is getting a bit of a pop on the headlines, with WTI crude now up 0.4% to $51.80.

China says that preventing people from entering borders is unreasonable

  
  Analysis
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But isn’t that what they are doing in Wuhan?

I’m sure China isn’t too happy about the negative attention it is getting in the media because of the coronavirus outbreak situation.

But I don’t think you can blame others for taking more drastic action in order to err on the side of caution when there is still limited information regarding the virus itself.

The fact that we are seeing countries such as Singapore and New Zealand stepping up security travel measures may yet potentially spark others to do the same, and that is something China isn’t too happy about I reckon.

PBOC says that stock market plunge today is due to some irrational factors

  
Analysis, Global Indices
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Says that impact from the virus outbreak on China’s economy is temporary

  • Stock market plunge also due to panic triggered by ‘herd effect’
  • Virus outbreak will not change China’s long-term economic fundamentals
  • Economic development still has positive factors and shows strong resilience
Chinese authorities have been offering a lot of reassurances during the course of the day and I reckon this rhetoric could be one that keeps up for the rest of the week as they try to inject some calm into markets today.
For some context, the drop in the Chinese equities today is the most since 2015 and the Shanghai Composite recorded its 6th largest % decline since 2000:
SHCOMP

China’s Shanghai Composite index closes down by 7.7%

  
Analysis, Global Indices

A bad day for Chinese stocks but it could have been worse

SHCOMP 03-02

The talk over the weekend is whether or not we will see Chinese equities be battered down by more than 10%. That didn’t quite happen but the nearly 9% drop in the early stages enough to trigger a flurry of measures by Chinese officials to try and keep the calm.

Meanwhile, the CSI 300 index closes lower by 7.9% on the day with the onshore Chinese yuan still down by over 1% against the US dollar in trading today.

China cuts rates

  
  Analysis
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China cuts rates on reverse repos

  • the rate on 7-day reverse repos goes to 2.4% from previously at 2.5%
  • on 14-day RRs goes to 2.55% from 2.65%
This is part of stimulus efforts to combat the negative economic impact of the coronavirus outbreak and spread.
There was a big injection of funds today (but there is a but):
  • 900bn yuan added via 7 day RRs
  • 300bn via 14-dayers
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