UBS Predicts China Economic Stimulus, Investors May Shift from Crypto to Stocks

Key Points:

• UBS predicts China will roll out a significant fiscal stimulus package of RMB 1.5 trillion to RMB 2 trillion soon.
• Wang Tao highlights the need for stimulus and reforms to stabilize real estate and restore confidence, aiming for 5% growth.
• China economic stimulus may be announced after National Day or with Q3 data on October 18, with further measures expected next year.

UBS believes China economic stimulus package will shortly be valued between RMB 1.5 trillion and RMB 2 trillion.

UBS Predicts Major China Economic Stimulus

In a recent report by local news RTHK Hong Kong, UBS Chief China Economist Wang Tao noted that different market estimates place the value of China’s fiscal stimulus package between RMB 2 trillion and RMB 10 trillion, or in a range of 1.6-8% of the country’s GDP.

Wang Tao estimated that, in the near term, there could be a more moderate China economic stimulus package of up to RMB 1.5 trillion-RMB 2 trillion, which can bring economic growth closer to the targeted 5% this year. For next year, UBS predicts additional fiscal expansion of RMB 2 trillion-RMB 3 trillion on top of the baseline projections currently.

Wang stressed that what is needed is a serious ramping up of stimulus measures and structural reforms to stabilize the property market, along with countering the economic slowdown. Such measures would be necessary to reverse the downward price trends and recover corporate and consumer confidence. All this will be required for China to achieve its growth target of around 5% in the next couple of years.

Read more: China Urged To Rethink Crypto Policy As US Leads Bitcoin ETFs

Upcoming Stimulus Announcement Expected in October

UBS expects an unveiling of this year’s fiscal stimulus to emerge shortly after the National Day holiday or around the release of third-quarter economic data on October 18. Meanwhile, decisions on next year’s measures may be made during the Central Economic Work Conference in December.

The National Development and Reform Commission will likely hold a news briefing tomorrow on the “systematic implementation of a package of incremental policies,” further stirring market expectations for more economic stimulus.