China has reportedly halted buying bonds from the Shanghai free-trade zone as a measure to curtail risk. This decision accompanies expectations of restrained stimulus and limited economic reforms to be revealed at the upcoming politburo meeting. The People's Bank of China previously directed lenders to purchase notes exclusively from issuers with genuine operations in the area. This move has led to increased scrutiny of the USD18bn market mostly leveraged by local government financing vehicles, with no FTZ bonds sold after June 16. Concurrently, Goldman's clients do not anticipate major policy easing or structural reforms at the politburo meeting. Despite a struggling property market, state-owned developers reported sales increases, while private entities experienced a decline.
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