Chinese markets didn't have a good day on Friday (HK closed), but I would suggest Monday will be much worse. MoF conference today delivered little, and in fact likely increased the amount of concern for bank & LGFV health.
Previous stimulus included demand-side initiatives (such as a "cash for clunkers" clone) that are really just supply side measures. Today seemed to concentrate on repairing capital for state banks and LGFV's pledging to resolve problematic "hidden debt", which isn't going exactly a good news story.
These again are also supply-side measures, not demand-side. For local governments, an unused bond quota of 2.3trn will be used to make up for revenue shortfalls. Demand-side"? Maybe, although it seems like this will just replace income that would've otherwise been lost. Not great. Special bonds for home purchases and acquiring "idle land" from developers in trouble -- again more supply-side. At the margin it may improve activity in property but this isn't like money for building a new piece of infra.
In regards to targeted measures to boost consumption, there was nothing concrete given, with promises relating to fiscal room to implement. This is well below the worst predictions.
For state banks, they will get a tier 1 core capital "refresh" through bond issuance. Not sure what this accomplishes apart from showing their hand in regards to bank capital. There seems to be some concern over central govt tax revenues as well.
I wasn't expecting much but this is way below even my expectations. Surely they are going to need a 3rd go at this. Stubbornness regarding direct stimulus is clearly still a problem within leadership, and Chinese markets (and more importantly for the rest of the world, commodities) will need it to recover.
