History leaves China stock bulls vulnerable in third quarter as Biden executive order, broken property market challenge optimism

Name: Boom, bust and borrow: Has China’s housing market tanked?
Uploaded: 2023-07-30T23:30:17.000Z
Duration: 10 min 57 s
Description: Boom, bust and borrow: Has China’s housing market tanked?

Biden is reported to be readying an executive order in mid-August to curb critical US investment in China, focusing on chip, artificial intelligence and quantum computing

China’s onshore benchmark CSI 300 Index has lost between 0.3 per cent and 15.2 per cent in the third quarter in four of the past five years

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The CSI 300 Index in China has only climbed 3.1 per cent this year, trailing major stock benchmarks in the region. Photo: Reuters

Jiaxing Li

Published: 7:30am, 31 Jul 2023

Chinese stocks are logging another month of gains as bullish traders cheer Beijing’s pledge to support the tech industry and revive the property market. Recent history suggests the next two months are likely to disappoint, if not challenging.

The CSI 300 Index, which tracks the largest onshore companies listed in Shanghai and Shenzhen, has underwhelmed the market, inflicting 0.3 per cent to 15.2 per cent losses in the third quarter in four of the past five years. This year could be no different, some money managers and analysts said.

“Best to forget China’s stimulus policies and focus on fundamentals,” said Qi Wang, co-founder and CIO of MegaTrust Investment (HK). The policy-driven rallies often turned dead fakes in recent years, and there will be multiple checkpoints ahead, he wrote in a note to clients.

A broken property market and cratering consumer confidence showed there is no quick fix for the struggling economy, Wang said.

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Boom, bust and borrow: Has China’s housing market tanked?

The US-China tech rivalry is set to heat up next month as the White House blocks critical US technology investment in China. A broken property market and cratering consumer confidence has showed there is no quick fix for the struggling economy. Rich with promises, Beijing’s pledge has remained poor on details and short on actions thus far.