🚩CHN.cash gains 1.4% despite Fitch lowering China outlook to negative
Futures on Chinese stock index, Hang Seng risen today above 6000 points after very strong session in China. Fitch Ratings revised outlook on China economy to negative, with affirmed 'A+' rating. However, Fitch doesn't expect further deflation in the country, which may be seen as quite 'bullish', despite the lowered overall outlook.
- Outlook revision reflects increasing risks to China's public finance The agency believes that fiscal policy is likely to play an important role in supporting growth in coming years
- Fitch forecasts general China government deficit to rise to 7.1% of GDP in 2024. What's more 2024 deficit will be highest since 8.6% of GDP deficit in 2020
- General government debt (local and central government debt) to rise to 61.3% of GDP in 2024 (54.0% 'A' median) from 56.1% in 2023. It's deterioration from 38.5% in 2019, when Chinese debt was well below the peer median, due primarily to sustained fiscal support to counter economic pressures.
- Debt as a share of revenue is forecast to be 234% in 2024, well above the 145% 'A' median. Fitch forecasts the debt ratio to rise to 64.2% in 2025 and nearly 70% by 2028 vs < 60% in our previous review
- The degree to which fiscal support reignites underlying GDP growth is a key uncertainty for our debt path. Risks from higher government debt are mitigated by a high domestic savings rate, which supports debt affordability and financing flexibility.
- China GDP growth to moderate to 4.5% in 2024, from 5.2% in 2023. Fitch doesn't forecast a prolonged period of deflation. Inflation outlook is set at 0.7% by end-2024 and 1.3% by end-2025
CHN.cash (D1)
Futures on Hang Seng Index (CHN.cash) increased today above major resistance level of SMA200 (red line) near 6000 points.