15 October 2024 – Today we ask ourselves whether the Chinese stimulus programme is possibly being underestimated by the market and whether it might not also provide solutions for growth in Germany and Europe. And the reporting season for the third quarter gives hope for strong results not only in the United States, but also in many emerging markets.
Is the Chinese stimulus programme being underestimated by the market?
As our regular readers know, we not only share news but also opinions. Today we want to give a brief opinion on the announced Chinese stimulus programme.
From the announcement of a new multi-billion dollar stimulus programme by the Chinese government, a euphoric reaction on the Asian stock markets, the first disappointment spread by the media about the lack of details, to more detailed information from the official side. And the market is currently reacting rather cautiously.
Long-term growth overlooked as an important detail?
One detail of the Chinese financial aid programme that has probably been (deliberately?) overlooked in many cases, but is very important, is that it has been designed for the long term. We consider this long-term approach to be a very clever choice. After all, large but short-term capital injections into the market are precisely that: a short-term and unsustainable stimulus for the economy that fizzles out again after a short time.
Long-term growth plans also desirable for Europe
Germany and the European Union could finally put such a long-term approach on their agenda instead of handing out billions in subsidies to long-since fossilised industrial dinosaurs. Productivity growth cannot be achieved if individual and comparatively small economic sectors, such as the EU steel producers, hold the manufacturing industry in Europe hostage with their demands for ever more market protection and thus hinder growth.
The global economy is growing – especially in Asia
Looking around the world, economic growth continues to be recorded in many regions. This is particularly evident in the emerging Asian countries outside China, according to the latest data from the World Bank. Another example is stainless steel consumption, which has continued to rise despite all the challenges in recent years, particularly in Asia (excluding China) and China itself.
Sustainable growth of large consumers desirable
We therefore see this long-term approach as a good starting point. Sustainable growth of large consumers such as China, Europe and North America have a medium to long-term and positive influence on the development of the global economy.
Reporting season with strong results expected
The reporting season for the third quarter promises strong results for both US small caps and emerging markets. In the US Russell 2000 index, analysts expect a 42 per cent rise in profits, led by communications service providers, which could double their profits, and technology stocks, which are likely to rise by two thirds. Industrial stocks are particularly robust with an expected increase of 40 per cent.
Positive outlook in emerging markets
The outlook for emerging markets is also positive. Technology companies, particularly from Asia, could increase their profits by 46 per cent. Industrial stocks are also expected to be strong with an increase of 34 per cent. South Korea and the Czech Republic stand out with particularly high profit forecasts of over 60 per cent. However, a differentiated view of regions and sectors remains crucial in order to make the most of opportunities.
Latest news
- Nickel, NPI and stainless steel prices up in China
- German crude steel production up significantly
- Asian stock markets friendly – Hang Seng up 3%
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.
