Macroscope | Investors are bearish on China, but have more to fear in the US
- China’s zero-Covid policy and property crackdown have undermined attempts to boost growth and dashed investor confidence – but at least expectations are in line with reality
- In the US, markets are still in denial about the Fed’s determination to bring down inflation with aggressive policy tightening
A cursory glance at the performance of stock markets since the start of the third quarter suggests China is a bigger source of concern. The CSI 300 index of Shanghai- and Shenzhen-listed shares is down 9 per cent, snuffing out a tentative recovery in May and June.
The benchmark S&P 500 index, by contrast, is up 9 per cent, outpacing the rise in the FTSE All-World Index, a leading gauge of stocks in developed and developing economies. Indeed, the technology-heavy Nasdaq Composite index has gained 12.7 per cent since June 16, showing the extent to which US equity markets continue to outperform their global peers.
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These hopes were dashed spectacularly. While expectations were too high to begin with, and markets the world over suffered heavy losses in the first half of this year, investors have been let down by ineffective measures to stabilise markets and shore up growth.