China’s wild week in markets: Calm returns but big challenges remain
CNN
It’s been a rollercoaster week for China and Hong Kong stocks.
It’s been a rollercoaster week for stocks trading in mainland China and Hong Kong. Key market indexes plunged Monday, taking year-to-date losses to between 7% and 10% and extending a protracted $6 trillion-dollar rout that began in 2021. Then, following a series of unusual interventions and announcement by worried Chinese officials, Hong Kong’s Hang Seng Index (HSI) rebounded to end the week up 4.2%, while the blue-chip Shanghai Shenzhen CSI300 logged a 2% weekly gain. Does the rally mark an end to the country’s three-year long market meltdown? Analysts say not just yet. A slew of economic problems — including a record downturn in real estate, deflation, debt, a falling birthrate and shrinking work force — haven’t gone away, and they will limit longer term gains. “Over the past 48 hours, China has announced a flurry of measures to support its economy and financials markets,” Nomura analysts said on Thursday. “We think these measures are likely to stabilize stock market sentiment and could potentially even support a relief rally in China stocks, given extremely low valuations, very light investor positioning, and technically oversold markets.” China is facing a myriad of economic problems, including rising debt levels and worsening demographics. Beijing’s shift towards ideology-driven policies have also scared away foreign firms and investors and soured relations with the United States.
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