June 23, 2024

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Chinese indicators are trying to stop the bleeding 🚩

Chinese indicators are trying to stop the bleeding 🚩

Chinese indices are trying to return to growth after 6 consecutive sessions of decline. The recent tough measures by market regulators have only temporarily improved sentiment around Chinese stocks. After a disastrous last week, the Chinese session was mixed today, with major indices rising slightly, but with the CSI1000 and CSI2000 indices of smaller company stocks closing with sharp declines of 6.8 and 9.4% respectively.

  • The International Monetary Fund's latest forecasts show that China's GDP will slow from 4.6% in 2024 to 3.5% in 2028. Meanwhile, US 10-year bond yields hit new monthly highs as the market sees Fed Powell Weekend, Revised Forecast. It also moved the planned cut date to May instead of the previously planned March (good for the dollar, negative for emerging markets).
  • The last two weeks have shown that measures taken to help the stock market do not necessarily help “in the long run.” However, China is not ready to give up. The Chinese regulator pledged on Sunday to stabilize the market after stocks reached their lowest levels in five years.
  • But it did not announce any concrete measures, although it said it would address short selling done in β€œbad faith” and attract more investment through long-term capital. But analysts at First Seafront Fund Management confirmed that all attempts to support the market so far have not been sufficient and there is still no strategy on the horizon to get the indicators out of the crisis.

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