A move to influence the stock market. infusions of liquidity made by the central bank. more restrictions on short sales. But Chinese stocks are unable to break free from the downward spiral in the real estate market.
This week’s data revealed that September saw the fastest rate of decline in home prices in nearly a year, while property investment, a major contributor to China’s economic activity, continued to decline. Investor euphoria over statistics indicating a pick-up in third-quarter economic growth was undermined by that.
The main CSI 300 Index erased all of the gains made during its historic reopening rally that began late last year as it fell more than 4% on Friday to end its worst week in a year. Despite a plethora of market-boosting measures, such as tightening restrictions on short sales, there was a selloff.
Investors need to see a way out of all the major problems, like the property woes,” said Hao Hong, chief economist at Grow Investment Group. “How Beijing manages its property market and handles its relationship with the US” are key, he said, adding that “nobody cares about economic data” right now.
Geopolitical worries in the Middle East exacerbated the weakness in global markets, which made things worse for China’s market. This week, foreigners sold 24 billion yuan (RM15.64 billion) worth of onshore stocks on a net basis. The most since the week concluded on August 18 is that. Morgan Stanley cautioned that foreign money outflows may continue and that mood is likely to remain fragile, therefore they advised against buying the dip.
This week saw the lowest level of Chinese developers’ stock prices since 2009 according to a Bloomberg Intelligence measure, as investor resistance to initiatives to expand the housing market continued. Homebuyers are still wary, and a number of major developers, like Country Garden Holdings Co., are still having liquidity issues.
“If there’s stabilisation on the real estate side and a pick up in consumer confidence, that will be the next thing that will drive the rally we’ve been waiting for,” Elizabeth Kwik, investment director of Asian Equities at abrdn, said in a Bloomberg Television interview.
Future events such as the Third Plenum and Politburo meeting, as well as a possible encounter between US President Joe Biden and President Xi Jinping at the APEC Summit next month, are said by some market observers to provide catalysts.
Property and local government debt are the two main dangers that Minyue Liu, an investment specialist for Asian and Greater China equities at BNP Paribas Asset Management in Hong Kong, identified as looming over China’s economy. “These problems still haven’t been fixed. We have heard that a comprehensive plan is being developed by the government. We truly hope that this will be revealed shortly.
According to Bloomberg this week, which cited people familiar with the topic, China is thinking of creating a state-backed stabilisation fund to boost confidence in its US$9.1 trillion (RM43.38 trillion) stock market. After hearing the news, the CSI 300 Index temporarily reduced its losses, but it still ended the day down.
With investors setting high standards for positive news, the gauge is headed for an unprecedented third consecutive year of losses in 2023, down about 10%.
According to Tina Teng, an analyst with CMC Markets in New Zealand, “recent measures taken by the government cannot solve the economic issue that China is facing, particularly in the property sector.” Even with the recent upbeat data, investors are still wary. For the data to persuade people, it must be reliable and always improving.
- Published By Team Hongkong Journalist