China stimulus talk is reaching a crescendo. IG's Evan Lucas...

China stimulus talk is reaching a crescendo. IG's Evan Lucas says reports are emerging that the National Development and Reform Committee has approved five new railway projects, and there are rumours the NDRC is looking to add to these, particularly in urban areas:
Credit Suisse suggests the fact it is the NDRC announcing these development having not been given approval for any in the previous three months means China is pushing the button on stimulus.
Credit Suisse believes that cost for these projects is likely to be around 142 billion renminbi , which may explain the changes seen over the commodities space. Copper saw a bullish break, jumping 2 per cent in London and New York as the prospect of the world’s largest consumer of the industrial metal drove traders back.
Iron ore has also reached a 10-day trading high after an extraordinary day on the futures yesterday. The more we hear about ‘increasing domestic demand’ and the acceleration of infrastructure projects like the rail projects, we will see copper and iron ore moving higher still.
The other likely action from China as it tries to quell slowdown fears is the PBoC may relax its crackdown on lending. Today for the first time in a week the PBoC has lowered the fixing rate to CNY6.1440 from CNY6.1426 yesterday.
The talk from the floors in China is that the PBoC is canvasing the appetite for seven- and 14-day repo raising. Considering the volatility in the rates in June last year, particularly in the seven-day repo if it is well bid it will show that corporate demand is still supportive and that funding will continue. This again is short term positive.


Read more: http://www.smh.com.au/business/markets-live/markets-live-no-stevens-jawbone-20140326-35h7l.html#ixzz2x2TyYozG