China: has the stock market stimulus already failed?
There is a feeling that even the authorities' latest stimulus to the Chinese financial market, achieved through the halving of stamp duties on stock exchange transactions and some other simplification regulations, is not having the desired effect, or rather that the stimulus lasted the unique beauty of an instant.
After having asked investment funds not to sell, and then having suggested many companies to carry out buyback operations, this was a further attempt by China to improve the fortunes of a financial market that was not brilliant.
Actually the stimulus worked, but only for a moment :
It almost seems as if someone was waiting for this moment to sell, making the maximum profit in a short period of time. A window of opportunity to jump into.
As Zerohedge notes, it was foreigners, non-Chinese investors and funds who sold. Probably, as we have just written, these operators were just waiting for the right opportunity to exit a market considered no longer profitable,
Conversely, Chinese traders remained on guard over the Chinese financial market.
The fall of the ChiNEXT market, the equivalent of the NASDAQ in China, was even dramatic
The stamp duty cut is aimed at increasing market volume, especially among retail bettors.
“ Chinese authorities are clearly stepping up efforts to rebuild confidence in Beijing's political commitment to achieve growth and support the market ,” said Xiaojia Zhi, China's chief economist at Credit Agricole.
“ But then fundamental growth improvement and tangible policy action domestically are needed to really change the mood, and therefore it may take longer.”
It is not enough to cut transaction taxes to revive a market. It is necessary to intervene radically on the cause of the crisis, ie on the lack of confidence linked to the debt crisis in the real estate sector and eliminate those factors that block growth. But this requires more than just a tax cut.
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The article China: has the stock market stimulus already failed? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-lo-stimolo-alla-borsa-ha-gia-fallito/ on Mon, 28 Aug 2023 20:02:25 +0000.