It's a ginormous undertaking; I'm cautiously half-optimistic. But in the short term, a stimulus effect to the market is quite certain. This is pathetic in a way, as it's entirely based on expectation of government action and the belief in its power. But I try not to pass moral judgment on the market.
There are also numerous technical factors pointing to the same. Hot money has been flowing into Hong Kong in recent weeks, forcing the local government into a scramble to control the exchange rate. The only logical explanation is that speculative money has recently been posturing to enter mainland China. Hong Kong is but the quickest gateway.
While capital exodus by foreign investors seems to have stopped a couple of months ago, that by domestic riches also seems to have slowed down as the power transition comes to resolution. Anecdotal evidence suggests that domestic institutional money is getting excited about the pending changes. In short, capital flow is in the midst of a multi-month reversal.
This transformation could last for years if it works out. But that'd be speculative. Over the coming weeks and months, it seems fairly certain.
At the time of publication the author was long FXI.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.