China Taps Global Bankers for Feedback to Lift Market Confidence

(Bloomberg) -- China’s securities regulator has ratcheted up the frequency of interactions with global banks, intensifying what had been quarterly discussions to sometimes weekly or ad-hoc queries aimed at gathering perspectives on recent stimulus measures, according to people familiar with the matter.

Over the past few weeks, the regulator has especially had an interest in revisions global banks make to their economic forecasts and analyzing daily flows to understand foreign investment trends, the people said, asking not to be identified because the deliberations are private.

Investors have had mixed reactions to Beijing’s latest stimulus package, which offered partial relief on local government debt but fell short of the robust fiscal support many had anticipated. The effort to gather data and feedback signals Beijing’s heightened urgency to revive the economy, as regulators have typically mainly held quarterly roundtables with foreign banks operating in the country.

In discussions with one of the banks, the regulator sought advice on how to boost foreign sentiment and appetite for Chinese assets, one of the people said. In the back and forth, the banks suggested holding international roadshows to clarify the new policies and improving communications with the market.

The China Securities Regulatory Commission didn’t respond to a request for a comment.

At a rare joint press conference in late September, China’s three top financial regulators unveiled a broad package of measures to help the $18 trillion economy, including interest rate cuts, more support for the stock and property markets, steps to reduce local debt risks and a recapitalization of the big state-owned banks.

The moves prompted a number of economists to upgrade their economic growth forecasts as well as rally in Chinese stocks. Still, enthusiasm quickly waned as investors held off to see whether authorities will deploy even greater fiscal support. Donald Trump’s election victory, which could lead to higher tariffs on China, has also added to the uncertainty over China’s economy.

At the same time, global banks have struggled to expand in mainland China years after the nation opened its financial market to full ownership for foreign institutions. Many have put the brakes on expansion plans, but are maintaining a presence should economic growth and dealmaking pick up.