Stabilizing economic fundamentals a top priority

The economy still faces downward pressure from perspectives of demand and production and stabilizing economic fundamentals remains a top priority in the near-term, information provider eastmoney.com reported, quoting a research note from Huatai Securities.

2020 is critical to securing a decisive victory building a moderately prosperous society in all respects.

Policy stimulus variables might be strong during the first quarter of next year, Huatai Securities said, especially in the reconstruction of old areas and construction of affordable housing, which could drive infrastructure and property investment.

Meanwhile, the issuance of special bonds is expected to beat market expectations. An executive meeting of the State Council said in September the government will speed up the issuance of special bonds to form effective investment. Huatai Securities predicted this policy's positive effects might surface in the first quarter of next year.

In terms of monetary policy, due to high inflation it's unlikely that the central bank will use price-based monetary policy tools in the near-term, according to the research note. 

Huatai Securities also predicted total social financing in early 2020 might be much stronger than generally expected. Outstanding total social financing, a gauge that measures all capital received by the real economy from the financial sector, rose by 10.7 percent year-on-year to 219.6 trillion yuan by the end of October.

In terms of industrial production, the inflection point might appear between the end of this year and the first quarter of next year. The profit end is still in the process of fixing, Huatai Securities said, adding the inventory cycle is expected to switch to a restocking period in the first half of 2020.