Here are the takeaways from today’s Morning Brief. Sign up to receive the following in your inbox each morning:
Even a quick look at the recent performance of the Chinese stock market shows a wide divergence from the S&P 500, Germany’s DAX, the UK’s FTSE, and even le CAC.
Despite being a high-tech manufacturing powerhouse, few would know that the artificial intelligence boom is helping to drive other major global markets to record highs.
Since 2021, China’s stock market has been struggling due to a variety of factors, including the country’s aggressive zero-corona virus policy, the real estate collapse and the debt crisis. The government has tried various strategies to stimulate the market, but with little success.
The country announced its latest strategy on Tuesday, a series of aggressive stimulus measures, which raised the classic question: “Will this time be different?”
A series of recent initiatives, largely comprised of monetary policy, are aimed at injecting liquidity and making borrowing easier where there is demand for credit.
This week’s chart shows that the market has an answer to that question, at least so far. “Yes, that will change.” The stimulus news sent Chinese stocks into a vertical line for the first time in years, turning a downtrend into the beginning of a V-shape as investors decided they saw a fundamental shift in China’s story.
“[Global]investors believe that Chinese stocks are almost uninvestable, despite the clear potential inherent in the world’s second-largest economy,” Datatrek’s Nicholas Colas said in a client note this week. “I regard it as such,” he wrote. “This week’s sudden announcements of aggressive fiscal and monetary policy measures are spurring a reassessment of that view.”
As billionaire David Tepper puts it, now is the time to buy “everything” in China.
The root of this reappraisal lies in the government itself, which exercises economic control.
“China’s leadership has finally acknowledged that further monetary and fiscal stimulus is needed if the country’s economy is to achieve its long-term growth potential,” Collas wrote.
Some China experts, such as Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co., remain unconvinced that the measures announced this week will actually have the effect of reversing China’s fortunes. “No judgment has been made yet,” he said.
But while the measures taken so far may not solve the economic woes, the sentiment that patients are finally being taken to hospitals is enough to give investors hope, pushing Chinese stocks higher. are.
the story continues
simple morning image
For the latest stock market news and in-depth analysis of price-moving events, click here
Read the latest financial and business news from Yahoo Finance
