China fights waning market confidence as analysts deliver ‘not enough’ message on stimulus to rev up economy, equities
- Some analysts are putting pressure on Beijing to do more, saying two key moves this week are not enough to rejuvenate the economy and stock prices
- Benchmark index stocks in mainland China and Hong Kong have gained US$360 billion in market value this month on stimulus bets
China is digging into its monetary toolbox to stimulate the economy, “fighting against deteriorating confidence” amid looming deflation risks, property market woes and elevated unemployment rate, according to US fund manager Invesco.
The rate-cut came a day after the Federal Reserve paused its rate-hike spree at the June policy meeting, while leaving the door open for more increases later this year to tame inflation.
The Hang Seng Index jumped 2.2 per cent, while the CSI 300 Index gained 1.6 per cent, on Thursday, adding to the US$360 billion market value expansion in June, according to Bloomberg data. The former is still 1.6 per cent lower than the level on December 31, while the CSI 300 rose 1 per cent. The S&P 500 and the MSCI World Index rallied more than 12 per cent.
Here’s what money managers and analysts say about the policy turns in the US and China.
David Chao, Singapore-based global market strategist at Invesco
“Today’s cut to the MLF suggests that policymakers are fighting against deteriorating confidence as the initial reopening burst of activity starts to fade. More monetary and fiscal stimulus measures are likely on their way to pull household and private business sentiment out of the doldrums.