China’s property sector slump rekindles debate over potential “Lehman moment” due to financial stress at asset manager. The yuan probably still has farther to fall. Anticipated fiscal stimulus from China unlikely to materialize.

Troubles at a big trust company worry investors about fallout from the slumping property sector

Signs of financial stress at a large asset manager in China are making investors nervous about contagion from the country’s slumping property sector, rekindling a debate over whether a “Lehman moment” could occur in the world’s second-largest economy.

The yuan probably still has farther to fall. A really sharp move would be deeply worrying—to say the least.

A weaker yuan could be a big help for China, given that food and energy costs have fallen recently and its exporters are struggling. But the prospect of big capital outflows following an unexpected yuan depreciation, as in 2015, probably still haunts Beijing. Between 2014 and 2016, foreign reserves fell by around $1 trillion.

So Beijing likely will keep leaning against a rapid depreciation with its administrative tools and gimmicks to punish speculators—and, as necessary, intervene to slow the fall with some of its $3.2 trillion in foreign reserves or foreign assets sitting at state-owned banks. It will be aided by China’s capital controls, refortified in the wake of the 2015-16 debacle—especially for overseas property and direct investment.

The yuan probably still has farther to fall, but a really sharp move would be a sign of either deepening desperation, as in 2015, or a capital-controls failure. Both remain unlikely, but either would be deeply worrying—to say the least.

Global investors expect China to deliver a massive fiscal stimulus. Here’s why it may never arrive.

Now, investors’ new wish is for Beijing to deliver a massive fiscal stimulus package — a policy tool used by China to great effect in 2008 — but that hasn’t yet been put on the table. And it is possible that it may never arrive, economists told MarketWatch.

“A big problem is markets have been trained on that approach of China tackling everything by throwing a lot of money at it, which is why there’s a lot of disappointment,” said Shehzad Qazi, managing director at China Beige Book. “Now, they [policy planners] are very guarded in how much stimulus they want to release. They’re doing it in very small doses along the way.”

China fuels US bond rout by slashing holdings to 14-year low as Washington-Beijing tensions drag on

China slashed its holdings of Treasurys to a 14-year low in June, as tensions between Washington and Beijing persist and the US’s rivals try to undermine the dollar’s supremacy.

The world’s second-largest economy trimmed its exposure to American government debt to by $103 billion, or 11%, according to Treasury Department data published Tuesday.

It’s the third straight month that Beijing has sold Treasurys and brings its total holdings to their lowest level since May 2009, per the South China Morning Post.