Economic stimulus in China: what impacts for European actions

Last week, the Chinese authorities announced a series of monetary stimuli intended to revive an economy which has struggled to get going since the lifting of restrictive measures linked to Covid. On September 24, the repo rate was lowered by +20 bp and the bank reserves required by the central bank were reduced by 50 bp. In addition, the mortgage rate also fell by 50bp. Additionally, on September 26, the Politburo announced fiscal measures that are expected to include the issuance of ultra-long-dated bonds worth 1 to 2 trillion renminbi. These measures triggered an impressive stock market rally. H shares have rebounded more than 20% since last week.  Commodities also benefited from these announcements. Copper rebounded by +8%, returning above USD 10,000 per ton. These stimuli are also good news for European stocks and in particular the luxury, mining, and to a lesser extent automobile sectors. That said, the question is whether this is just a temporary rebound. Indeed, the scale of the measures taken by the authorities may raise fears that the situation could be even worse than anticipated.