In the market on the 16th, Chinese asset selling worsened. The yuan is declining to a 16-year low as major stock indices look set to erase the gains since the Politburo of the Communist Party of China signaled more support for the property sector at its meeting last month. .
The MSCI China index was down 1.3% at one point, and if it continues to draw, it will be below the level at which the policy was signaled at the Politburo meeting. The Hang Seng China Enterprises Index (H Shares) is about to spit out all its post-meeting gains. The Hang Seng Index closed 1.4% lower, approaching a technical bear market.
A spate of weak economic data, renewed concerns over the property sector and a growing crisis in the shadow banking industry are fueling selling pressure across all of China’s financial markets. All of this creates deflationary pressure and threatens to hurt corporate profits. The small-spending policy has so far failed to restore confidence, and investors are calling on Beijing to take a more aggressive step in stimulating the economy.
Manish Bhargava, fund manager at Straits Investment Holdings in Singapore, said, “China’s current recessionary situation, represented by deflationary pressures, is likely to affect the interaction between the domestic economy and the global economy. It will have a significant impact on both,” he said. “Investors may be wary of allocating to China due to concerns about a weaker economy and lower potential returns,” he said.
The market reaction to the government’s successive economic stimulus measures has been weak so far, highlighting the deep-rooted pessimism of investors. Bloomberg reported Monday that regulators had asked some investment funds not to oversell their stocks, but the selling continued.
China urges some investment funds not to oversell stocks amid sluggish markets
Foreign investors are again selling Chinese stocks through stock market connections with Hong Kong. It was the eighth consecutive trading day of net selling in Chinese stocks.
news-rsf-original-reference paywall">Original title:China Markets Approach Grim Milestones as Selloff Spirals(excerpt)
2023-08-16 11:45:38
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