Monday, March 4, 2019

China's National People's Congress Starts Tomorrow

I'm so excited, and I just can't hide it.
Colby Smith has a piece this morning at FT Alphaville on Chinese stocks:
For months now, Chinese equities have been on a tear. The CSI 300 index of stocks listed in Shanghai and Shenzhen has surged a whopping 29 per cent since the first trading day of the year, reversing last year's losses. Another index, the Shanghai Composite, has gained nearly as much.
Chinese equities climbed another leg higher late last week, following the decision by the world's leading equity index provider, MSCI, to speed up its increase of China's weighting in its flagship emerging markets index.

But those hoping a domestic Chinese stock market that is more enmeshed with its global counterparts will mean supercharged returns may be sorely disappointed. In fact, index inclusion has a limited effect when it comes to equity performance....MUCH MORE
Reading that, I got one of those "Oh hell what day is it?" moments thinking I had missed the start of the NPC, But, big sigh of relief, it starts tomorrow.

Here's Macro Polo:
GDP Target and Beyond: Things to Watch at This Year’s NPC
China’s annual legislative confab, the National People’s Congress (NPC), starts March 5. Many foreign observers will be paying attention to the passage of the new Foreign Investment Law, which will likely adopt a “pre-establishment national treatment” approach to foreign investment that is meant to give equal access and treatment to both foreign and domestic firms. But there are a few equally important issues that bear watching—namely the GDP target, social security contribution, and the property tax.

Why the GDP Target Shouldn’t be Dismissed Outright
The most widely anticipated announcement at the NPC will be the GDP target, which will be revealed during Premier Li Keqiang’s Annual Work Report, the equivalent of a “State of the Union.”
As I have written previously, China’s 2019 GDP target is likely to be set as a range between 6% to 6.5%. But which end of the range will real GDP growth fall closer to? The work report should offer some clues. For instance, the report typically provides the annual fiscal deficit target both in the form of percentage of GDP and total value. These two pieces of data allow us to infer Beijing’s projected nominal GDP value. For example, in 2018, Beijing’s fiscal deficit target was 2.38 trillion yuan ($350 billion), or 2.6% of GDP, suggesting Beijing projected total GDP of 91.5 trillion yuan ($13.7 trillion). Actual 2018 GDP turned out to be 90 trillion yuan ($13.4 trillion), about 2% lower than the projection (see Figure 1).

Once the nominal GDP projection for 2019 is determined, we can compute Beijing’s 2019 nominal GDP growth rate projection, which is the closest proxy of an acceptable growth rate for Beijing. Comparing Beijing’s nominal growth rate projection with actual growth rates last quarter can help infer the Chinese government’s attitude toward supporting growth....MUCH MORE
I'm not quite clear on why the Pointer Sisters made an appearance in the introduction.