China may not have announced bazooka-like stimulus at its annual parliamentary meeting this past week, but it made clear which sectors it will support. Beijing announced a GDP growth target of around 5% and an official fiscal deficit of 3%, matching last year’s goals. Authorities announced plans for “ultra-long” bonds for special projects, while hinting they could still deploy other stimulus tools . “While the level of fiscal stimulus may be unimpressive and the underlying property risks remain, we believe the strategic focus on nurturing new productive forces, developing the digital economy, promoting domestic consumption, and continuing opening-up should be positive for earnings growth and create structural opportunities in the A-share market,” HSBC China equity strategists Steven Sun and a team said in a report Wednesday. In the past week, China’s top economic planning agency talked up how a push to upgrade equipment will create annual spending of more than 5 trillion yuan — that’s about $700 billion a year in corporate capex. The Ministry of Finance said that this year it would spend tens of billions of yuan on manufacturing and vocational education development. China’s annual report on the work of the government “once again emphasized the high-quality development of the digital economy and specifically mentioned ‘AI+’ initiatives to promote digitalizing traditional industries,” the HSBC analysts said. “Therefore, we believe industries related to the digital economy will benefit, including those related to AI servers and network hardware, as well as software applications (AI+) such as cybersecurity,” they said. The broader market has yet to be impressed. After a volatile start to the year, the Shanghai Composite rose by about two-thirds of a percent in the last week, with gold and power generating-related stocks among the biggest gainers, according to Wind Information. The new securities regulator, Wu Qing, made his first major press appearance in the role…
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