Morning from Copenhagen.

It’s safe to say that the China frenzy is slowly but surely fading these days, with all new stimulus announcements failing to lift sentiment. Chinese equities seem to have stalled from a momentum perspective.

Today’s property briefing was yet again not a home run, with the only real news being that they will bolster the funding of “white list” projects. The problem seems to be that China underestimates the issues they have on the demand side while overestimating their supply side issues. A large portion of the announced stimulus has been supply-focused, largely honing in on boosting housing supply. But is this really a great idea when almost every homeowner is prioritizing paying off their mortgages quicker instead of spending, given that property prices have been sideways over the past few years?

You might reach your goal of 5% GDP growth by doing that, but the problems at hand are much more structural, and China is currently choosing the wrong approach.

Chart 1: China is dealing with a demand problem, not a supply problem