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.