Source: Wall Street See

Bridgewater Associates founder Dalio said on Monday that if China's decision-makers can implement measures that far exceed commitments, this round of stimulus measures will be a historic turning point, comparable to former ECB President Draghi's pledge in 2012 to 'do whatever it takes' to save the euro. With a series of policies help, Draghi ultimately succeeded in rescuing Europe from the debt crisis.

With the continuous efforts of stable growth policies, there has been a major shift in policies in various fields such as finance, fiscal, and real estate, leading to a continuous surge in A shares. On Monday, September 30, the Shanghai Composite Index hit the largest single-day increase since October 2008, with a total turnover of nearly 2.6 trillion, breaking a historical record.

In response to the recent surge in the Chinese market, Dalio posted on LinkedIn on Monday, comparing the policy shift by the decision-makers last Monday to Draghi's commitment in 2012 to 'do whatever it takes' to save the euro. He believes that highly stimulating policies will be introduced next, which will help and support asset prices:

This is an important week, in fact, I believe this week is very important and may be recorded in the annals of market economic history.

As long as decision-makers take necessary actions, which require far more actions than what has been announced.

Dalio believes that last week's series of policy shifts are an important step in stimulating creative productivity. Considering that Chinese assets are still very cheap, various factors have ignited the 'animal spirit' in the market, leading to a large number of investors entering the market to bottom pick.

Dalio stated that in order to achieve what he considers 'perfect deleveraging,' China needs to restructure assets, while creating money and credit in a balanced manner (lowering interest rates below the level of inflation and nominal growth rates) to alleviate the debt burden without triggering excessive inflation. This 'reinflation' measure will reduce the attractiveness of cash below other assets, encouraging people to take risks:

Policies that support the market and entrepreneurs also have a stimulating effect, which is especially favorable in this situation.

These practices are starting to reignite bottom fishing and 'animal spirit'. We can now clearly see this situation unfolding.

Editor/Rocky