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This “monetary easing cocktail,” as it has been described, features a mix of rate cuts, reductions in mortgage costs, and liquidity injections aimed at stabilizing financial markets. Despite the initiative’s broad reach, analysts at BCA Research believe these measures are insufficient to drive a meaningful recovery, as the deep-rooted structural challenges remain largely unaddressed.At the heart of this new stimulus are five major components. First, the People’s Bank of China announced a 50-basis-point reduction in the Reserve Requirement Ratio for banks, aimed at enhancing liquidity in the financial system. This was accompanied by a 20-basis-point cut to the 7-day reverse repo rate, which is expected to reduce borrowing costs through marginal cuts to the Loan Prime Rate and the Medium-term Lending Facility rate. In addition, mortgage rates were also trimmed by 50 basis points, with lowered down-payment requirements for second home purchases to incentivize activity in the housing market. Furthermore, the PBoC introduced an RMB 800 billion support package to provide liquidity for equity purchases by securities firms and listed companies, aimed at propping up the stock market. Finally, additional financing was extended to state-owned enterprises for converting unsold residential units into low-cost rental housing in a bid to alleviate pressures in the property sector.Despite these measures, BCA Research remains skeptical about their ability to revive the broader economy. For instance, while the reduction in mortgage rates might bring relief to some households, the aggregate savings it will generate—roughly RMB 150 billion annually—represent only a 0.3% boost to personal consumption. This is too small to meaningfully alter the trajectory of consumer spending. More importantly, the labor market is under significant strain, with deteriorating job prospects and stagnant wages hampering any potential recovery in household consumption. Without stronger employment growth, any boost from lower borrowing costs is likely to be modest at best.Similarly, while the RRR cut may increase bank liquidity, the real issue facing China’s economy is weak demand for loans. With the prime lending rate still hovering around 5% and deflationary pressures continuing, even marginal cuts to borrowing costs are unlikely to stimulate new credit demand. Households and businesses remain hesitant to borrow, particularly with falling property prices casting a shadow over consumer confidence. The property market, a key driver of China’s growth in the past, continues to struggle, with downward pressure on prices likely to persist.Beyond the financial system, local governments remain constrained in their ability to drive growth. Anti-corruption investigations have surged in recent years, leading to increased caution among local officials, many of whom are reluctant to initiate new infrastructure projects or take on additional debt. This reluctance has curtailed one of the traditional levers of economic expansion, as local government spending has historically played a vital role in stimulating activity, especially during downturns.BCA analysts argue that China’s current predicament—a mix of debt deflation and what they describe as a “balance sheet recession”—requires far more aggressive interventions than the measures announced. What the economy truly needs, they suggest, are large-scale quantitative easing targeted at the housing market and fiscal transfers to households to boost their confidence and spending power. The latest stimulus package, however, remains piecemeal and unlikely to address these deeper issues. Without more comprehensive fiscal policies, the economy is unlikely to stage a significant recovery in the near term.For investors, the outlook remains cautious. The stimulus may provide temporary support to the stock market, particularly onshore Chinese equities, which BCA upgraded to overweight within global and emerging market portfolios. However, broader global market conditions could limit the upside, especially in the face of rising geopolitical risks and a potential global trade slowdown. As such, while Chinese A-shares might offer some opportunities, BCA advises a more neutral stance on offshore Chinese stocks and recommends against taking large long positions in Chinese equities for absolute-return investors, particularly if global markets enter a risk-off phase. More
BCA Research’s Global Political Capital Index provides insights into countries best equipped to withstand global instability while delivering strong returns. The index assesses political capital, economic flexibility, regional stability, and trade dependencies, helping investors narrow down their options.As geopolitical risks rise, countries with new leadership and strong political capital can implement effective policies for economic growth. Governments capable of deploying fiscal and monetary stimulus—due to low interest rates and manageable public debt—are better positioned to address future challenges. Regions exhibiting relative stability offer safe havens for investors amid conflicts that could cause market volatility.BCA Research identifies several developed markets with promising investment opportunities due to political renewal and economic resilience. The Netherlands, having recently revitalized its political landscape through elections, stands out. Its political capital, combined with low dependence on trade with the US and China, makes it a stable and attractive investment target. Similarly, the United Kingdom benefits from renewed political momentum following its latest election. Despite post-Brexit challenges, the UK maintains enough flexibility in both fiscal and monetary policy to withstand potential global headwinds, aided by relatively modest reliance on China.Spain also emerges as a compelling option, with recent elections strengthening its political environment and enabling effective governance. Economic indicators show improvement, particularly in unemployment and inflation trends. Spain’s low dependence on US and Chinese trade offers additional stability, making it appealing for investors.Australia provides a favorable investment climate, supported by a stable government and its geographic positioning in the relatively stable Asia-Pacific region. This geographic advantage shields it from immediate conflicts affecting other regions. Australia’s political stability, room for economic stimulus, and resilience make it a top choice for long-term investors.New Zealand benefits from political renewal and geographic isolation. The recent government change has enhanced its political capital, while low trade dependency on the US and China positions it favorably for investors seeking to mitigate risks from global tensions.Among emerging markets, Mexico stands out as a prime investment destination. Recent elections have revitalized the country’s political capital, positioning the government to enact growth-oriented reforms. While Mexico’s close ties to the US could be risky amid geopolitical tensions, they also offer growth potential if the North American economy remains strong.India presents another attractive case with its newly elected government, which enhances political flexibility for implementing necessary reforms. Its low reliance on the US and China makes India particularly appealing, boosted by a stable regional environment and strong internal economic dynamics.Indonesia, with a solidified political capital from recent elections, also ranks highly. Its manageable exposure to major global powers lessens the risk of economic disruptions. A growing economy and relative insulation from global conflicts provide stability and opportunity for investors.In the Middle East, the UAE is known for maintaining stability amid regional volatility. With stable leadership and forward-looking economic policies, the UAE showcases strong political capital and fiscal flexibility, making it a standout in the emerging markets.Chile emerges as another attractive option, benefiting from a diversified economy and low trade dependence on the US and China. Despite labor market challenges, Chile’s stable government can adapt to shifting global conditions, maintaining its appeal for investors in Latin America.However, certain regions pose investment risks. China, despite its economic size, is viewed as increasingly precarious due to slowing growth, trade tensions, and political challenges, along with high export dependence on the US and Europe. Turkey also faces deep political and social unrest, diminishing its investment attractiveness. Hong Kong remains uncertain, operating under the influence of Chinese policies.BCA Research’s highlight a growing divide between countries that can effectively manage economic and geopolitical challenges and those that cannot. In developed markets, the Netherlands, UK, Spain, Australia, and New Zealand show political stability and adaptability in their economies. Meanwhile, emerging markets such as Mexico, India, Indonesia, the UAE, and Chile display robust political leadership and economic strength.In light of ongoing global uncertainties, these countries present opportunities for solid returns while minimizing exposure to geopolitical and economic shocks. More
Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More
Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More
Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More
“It’s something the Bank of Japan, which is mandated to achieve price stability, will decide while working closely with the government,” Ishiba told public broadcaster NHK, when asked about further interest rate hikes by the central bank.”From the government’s standpoint, monetary policy must remain accommodative as a trend given current economic conditions,” he said. More
ATLANTA (Reuters) -Authorities across the southeastern U.S. faced the daunting task on Saturday of cleaning up from Hurricane Helene, one of the most powerful and perhaps costliest storms to hit the country, as the death toll continued to rise.At least 47 deaths were reported by early Saturday, and officials feared still more bodies would be discovered across several states.Damage estimates across the storm’s rampage range between $95 billion and $110 billion, potentially making this one of the most expensive storms in modern U.S. history, said Jonathan Porter, chief meteorologist of AccuWeather, a commercial forecasting company. Downgraded late on Friday to a post-tropical cyclone, the remnants of Helene continued to produce heavy rains across several states, sparking massive flooding that threatened to cause dam failures that could inundate entire towns.”The devastation we’re witnessing in Hurricane Helene’s wake has been overwhelming,” President Joe Biden said on Saturday. “Jill and I continue to pray for all of those who have lost loved ones and for everyone impacted by this storm.”Biden was briefed about the loss of life and storm’s impact on multiple states by Deanne Criswell, administrator of the Federal Emergency Management Agency, and Liz Sherwood-Randall, the White House’s homeland security adviser, the White House said. The president directed them to continue to focus on speeding up support to storm survivors and accelerating recovery efforts, including the immediate deployment of additional search and rescue teams into North Carolina, it added.At least 3 million customers remained without power on Saturday afternoon across five states, with authorities warning it could be several days before services were fully restored. The worst outages were in South Carolina with more than 1 million homes and businesses without power, and Georgia where 750,000 were without power.Some of the worst rains hit western North Carolina, which saw almost 30 inches (76 cm) fall on Mount Mitchell in Yancey County, the National Weather Service’s Weather Prediction Center reported.Atlanta was hit with 13 inches of rain, and farmers in South Georgia were assessing the damage to the state’s $1 billion cotton crop and $400 million pecan crop now in harvest season.Before moving north through Georgia and into Tennessee and the Carolinas, Helene hit Florida’s Big Bend region as a powerful Category 4 hurricane on Thursday night, packing 140 mph (225 kph) winds. It left behind a chaotic landscape of overturned boats in harbors, felled trees, submerged cars and flooded streets.Police and firefighters carried out thousands of water rescues throughout the affected states on Friday.More than 50 people were rescued from the roof of a hospital in Unicoi County, Tennessee, about 120 miles (193 km) northeast of Knoxville, state officials said, after flood waters swamped the rural community.’CHIMNEY ROCK IS GONE’The NWS issued flash flood warnings overnight for a swath of eastern Tennessee covering 100,000 residents, warning them to seek higher ground. The Nolichucky Dam in Tennessee’s Greene County was on the brink of failure on Saturday, officials reported, adding that a breach could occur at any time.In western North Carolina, Rutherford County emergency officials warned residents near the Lake Lure Dam that it might fail, although they said late on Friday that did not appear imminent.Multiple people in and around Chimney Rock, North Carolina, described the village’s downtown as washed out, with images online showing inches of mud and sediment, uprooted trees and snapped telephone poles and buildings turned into debris.”All right folks, listen up, Chimney Rock is gone, Flowering Bridge is gone,” somebody known as Touristpov posted on TikTok, showing videos of the destruction. “I don’t know what they’ll do to get us out of here.”In nearby Buncombe County, landslides forced Interstate Highways 40 and 26 to close and parts of them were washed out, the county said on X.Mountain communities such as Boone and Burnsville, North Carolina, were cut off as highways were clogged with debris or washed out, said Rebecca Newton, who was scrambling to find anyone with cell service in the area who could check on her family home near Mount Mitchell.”Towns are totally cut off,” she said after spending her morning making dozens of calls to friends in the area. “They’re using helicopters to get people out of Boone and Asheville.””Spruce Pine is gone, nothing but rooftops poking out of water,” she said of the mountain community about 50 miles northeast of Asheville.Newton said a friend told her she had watched houses in her neighborhood slide one at a time into a river near Boone.”It’s unreal,” she said.The Burnsville Hub Facebook (NASDAQ:META) page is replete with people desperate to find anyone to check on relatives and friends cut off from telephone service.One poster, Rachel Richmond, wrote, “I need any route that will get me as close as I can. I will walk the rest of the way. I need to get to my parents.”WAKING TO DISASTERThe extent of the damage in Florida began emerging after daybreak on Friday.In coastal Steinhatchee, a storm surge – a wall of seawater pushed ashore by winds – of eight to 10 feet (2.4-3 meters) moved mobile homes, the weather service said. In Treasure Island, a barrier island community in Pinellas County, boats were grounded in front yards.The city of Tampa posted on X that emergency personnel had completed 78 water rescues of residents and that many roads were impassable because of flooding. The Pasco County sheriff’s office rescued more than 65 people.A total of 11 people died in Florida, Governor Ron DeSantis said on Saturday, speaking in Perry, Florida, which saw 15-foot storm surges, larger than those seen in hurricanes in recent years.”If you look around here, you can see that some homes are just rubble,” he said. “This stuff comes in, it’s fierce and it’s just unstoppable.” FEMA’s Criswell joined DeSantis on a tour of storm-damaged areas of the state. She will travel to Georgia on Sunday and North Carolina on Monday, the White House said.”I just want to say on behalf of the president that we extend our deepest sympathies for those families that have lost loved ones,” Criswell said. Georgia Governor Brian Kemp’s office reported 15 storm-related fatalities in that state, while North Carolina Governor Roy Cooper said there had been two deaths there.At least 19 people died during the storm across South Carolina, the Charleston-based Post and Courier newspaper reported, citing local officials.(Reporting and writing by Rich McKay; additional reporting by Joseph Ax, Andrew Hay, Brad Brooks, Ismail Shakil and Andrea Shalal; Editing by Bill Berkrot, Daniel Wallis and Paul Simao) More
