BHP, Fortescue and Rio Tinto tumble as China underwhelms
China's stock market, commodity prices and local miners have ticked sharply lower as China's NDRC meeting fails to introduce more stimulus.
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Mentioned
KEY POINTS
- Chinese stocks give back early gains as its NDRC failed to meet the market's expectations of more 'bazooka' like stimulus
- Iron ore and copper prices fell sharply, leading to significant sell-offs in major mining stocks like BHP, Rio Tinto, and Fortescue
China's highly anticipated return after the week-long "Golden Week" holiday has seriously disappointed investors, with major Chinese benchmarks and commodities trading sharply lower.
The market's return coincided with a highly anticipated press conference by China's top economic planner, the National Development and Reform Commission (NDRC). Investors had hoped for a comprehensive action plan to revitalise the country's struggling economy. However, the conference failed to deliver on additional fiscal stimulus measures.
The conference was said to be "a very different one from the joint press conference by the PBOC ... [where] Governor Pan Gongsheng came out and almost immediately announced actual policies. The NDRC’s head Zheng Shanjie just spoke for about 15 minutes and didn’t announce anything new," noted Bloomberg's James Mayger.
"So far, there’s been a lot of mentions of “coordinating” and “intensifying” what other ministries and regulators are doing," he added.
When Zheng finally outlined some future plans, they fell short of the substantial fiscal stimulus many had anticipated. The proposed measures included:
Issue 100 billion yuan (US$14 billion) worth of investment plan for early next year
Accelerate local governments use of bond money on projects
Issue ultra-long sovereign bonds to support projects
Increase subsidies for students
Market reaction
China's Shanghai Composite Index opened 10% higher but gains faded as low as 1% at 1:40 am AEDT.
China's Shanghai Composite Index intraday chart (Source: TradingView)
The Hang Seng Index was up as much as 30% since August. It's currently down around 6% on Tuesday. If the Index doesn't bounce, this will mark its worst day since 2008.
Hang Seng Index daily chart (Source: TradingView)
Singapore iron ore futures were up 2.6% heading into the press conference and swung sharply into negative territory, currently down 4.3% to US$107 a tonne.
Singapore iron ore futures intraday chart (Source: TradingView)
Likewise, copper was trading around breakeven for the day, now down around 1.7% to US$4.4/lb.
Copper intraday chart (Source: TradingView)
Iron ore miners sell off
Heavyweights BHP, Rio Tinto and Fortescue are trading off worst levels but still 1-6% lower as of 2:40 pm AEDT.
Rio Tinto (red), BHP (orange) ,South32 (green) and Fortescue (blue) intraday chart (Source: TradingView)
Interestingly, as local miners started to sell off around 1:00 pm AEDT, Commonwealth Bank (ASX: CBA) and other major banks started to tick higher.
Could the recent rotation out of banks reverse given today's underwhelming stimulus updates?
BHP (blue) vs. Commonwealth Bank (orange) intraday chart (Source: TradingView)
