China’s Massive Stimulus Lifts Markets

• China announced huge stimulus to boost its economy, and markets are cheering

• What should you invest in?

China announced its biggest economic stimulus since the pandemic, which is reverberating in financial markets globally.

The stimulus, China’s latest attempt to pull its economy out of a slump caused by a shaky property market and deflationary pressures, includes over $325 billion in measures, mostly via monetary channels.

For banks, the PBOC cut the amount of money required to set aside for loans — the reserve requirement ratio — by 50 basis points, freeing up about $142 billion in short-term liquidity.

China's commitment to substantial monetary easing, combined with the U.S. Federal Reserve's aggressive 50 basis point rate cut, has further fueled market momentum

So what is a good investment right now?

Well in the wise words of one of the most successful hedge funds David Tepper ‘everything’ in China: ‘ETFs…futures…everything’

Another prominent hedge fund manager Michael Burry had been a prominent China stock bull.

Why is that?

Historically, there has been a strong correlation between the big indices and the M2 money supply, with both moving in tandem over the past several years.

Central banks' expansionary policies combined with a rising money supply are fueling asset price appreciation across the board.

The boost in liquidity will help drive asset prices forward, boosting further confidence among market participants.

If central banks continue to provide support, financial markets may well continue to push higher, though for how long momentum can hold remains the bigger question.

Investors can long China using our 3x China Tech,  3x China, 3x Alibaba, 2x Micron Technology.

Alternatively, traders can short China using our -3x China, -3x Alibaba.