Asia wrap: All eyes in China on Saturday

Chinese stocks were spinning like a top on Thursday morning as traders braced for Beijing’s highly anticipated fiscal policy briefing set for Saturday. The CSI 300 Index shot up nearly 3%, oscillating between gains and losses after a punishing 7.1% plunge the previous day—the index's worst drop since 2020. Meanwhile, over in Hong Kong, Chinese stocks surged more than 4%, fueled by a burst of optimism ahead of Friday’s holiday.

All eyes had been on NDRC Chairman Zheng earlier this week, with expectations that he would drop the fiscal stimulus bombshell at a Tuesday briefing. Instead, traders were served a lukewarm platter of rehashed talking points and vague nods to previously announced measures, leaving the market hungry for real action. Now, it’s make-or-break as hopes rest on Saturday’s briefing from the finance ministry to keep the rally alive.

So far, fiscal firepower has been conspicuously missing from Beijing’s stimulus arsenal, and the pros are warning that if the upcoming pledges don’t bring actual cash to the table, this rebound could turn into another false dawn. Whether Finance Minister Lan can steer this ship straight is still up in the air. Chinese investors, notorious for wearing their emotions on their sleeves, are growing impatient. There’s a sense Beijing’s banking too much on the PBoC to do the heavy lifting—an approach that risks stagnation.

History has taught us—just look at the post-2008 Western economies—that relying on monetary policy alone without enough fiscal backup spells sluggish growth, disinflation, and the kind of asset bubbles China desperately wants to avoid. The PBoC and the Ministry of Finance reportedly held a joint meeting on Wednesday, with much of the talk centred on curbing one-way bets on lower yields in the bond market. But you can bet “other matters” were on the table, too.

Now, all eyes are on Lan’s Saturday press conference. The timing has left traders frantically debating their hedging strategies. If Lan delivers a robust fiscal package, expect stocks to skyrocket. But if it’s another round of empty promises, prepare for another painful slide. The stakes couldn’t be higher, and traders are holding their breath for what could be the turning point in this volatile market.

I don’t see a good reason why the Party scheduled the fiscal policy briefing for Saturday, but Beijing likely wanted to time it when the markets were closed. This way, they’d give investors—prone to knee-jerk reactions—a full day to digest whatever the Ministry of Finance announces before letting the hysteria spill into the Monday trading session.