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China signals more monetary policy stimulus on the table

Yahoo Finance's Jared Blikre breaks down how stocks exposed to China are trading on news of rising COVID cases and the possibility of monetary stimulus.

Video Transcript


AKIKO FUJITA: Well, on the economic front, China is signaling more monetary stimulus is on the table as COVID outbreaks continue to put its economy under pressure. Economists surveyed by Bloomberg predict growth of just 3.3% for the full year. That's well below Beijing's official target of about 5 and 1/2%. And with more on China's economy as it faces a new wave of COVID outbreaks, let's bring in Yahoo Finance's Jared Blikre. Jared, you know, we're still talking about China having this official 5 and 1/2% target. But of course, I don't think anybody out there expects China to get anywhere near that this year.

JARED BLIKRE: I-- I think it's safe to throw that out the window. And we have to be practical here of China has been in the forefront for a number of reasons this year, as zero COVID policy enjoys at least a second and third look. There's tremendous upheaval. And this is what China-exposed stocks are doing today. We're going to get back to this in a second.

But I just want to go over some of the key stats and reiterate what Anjalee was saying. So the 28,000, that is a daily COVID count. That is matching just about what we saw earlier in the year in March. And that was a key window. That gives us an insight into how much this is economically hurting the company.

Now, 90% of the company-- of the country is already vaccinated. But this is a Nomura model that studied what was happening in March. With 20% of the population affected by GDP in lockdown, they are costing themselves $46 billion per month. And that is just an estimate. So if we were to experience what this currently, what we did in March, that would have huge-- huge implications for the sector going forward.

Now, we do have these China-exposed stocks here that I was showing you before. A lot of these are in the tech play. A lot of these are Apple suppliers as well. And you can see they're enjoying a nice day. Over the last month, Chinese stocks in general have gotten a nice boost. Now, again, a lot of these are US based. But let me go to show you what some of the native tickers are doing. And we can see it's reflected here as well.

So China on the upswing here, but tremendous upheaval within the country. And divisions and protests all signal that there could be more problems on the horizon.