Posted on 01/18/2024 4:50:33 AM PST by FarCenter
The startling divergence between China’s 5.2% growth and cratering stock market is putting Asia’s biggest economy in global headlines for all the wrong reasons.
Given the chaos of 2023 — a massive property crisis, record youth unemployment, trade headwinds from Washington and deflationary pressures — China’s ability to top 5% growth year on year is impressive indeed. But the stock market continues to stumble, a rout that shows few signs of slowing.
So how bad could things get? In the first two weeks of 2024, global funds sold more than US$1.1 billion of mainland stocks. China’s CSI 300 index this week fell to its lowest levels since 2019, losing more than 25% over the last year. That’s the mirror image of the 24% rally in the S&P 500 over the same period.
China’s stock troubles have many causes. The most recent: disappointment that the People’s Bank of China didn’t loosen monetary rates this week. It left rates unchanged on its seven-day reverse repo and medium-term lending facility. Markets had been expecting cuts.
“The PBOC’s decision to hold rates is negative for market sentiment and economic growth, and suggests policymakers are not trying very hard to present a coordinated, strongly pro-growth message at the start of the year,” says Wei He, analyst at Gavekal Dragonomics.
Recent data show that China entered 2024 with a series of headaches undermining domestic demand and confidence. Property-related spending is sliding and home prices are the weakest since 2015.
Consumer prices have dropped for three consecutive months, suggesting the worst deflationary pressures since the 1997-98 Asian financial crisis.
Then there are the data trends that fuel “Japanification” chatter. That includes news that the historic decline in China’s population continues, with births falling to a record low in 2023, adding to Beijing’s longer-term demographic challenges.
(Excerpt) Read more at asiatimes.com ...
The idea of demographic decline as part of the decline, and massive youth unemployment are two concepts that don’t seem to mesh
More going on here than meets the eye
Good point, but I imagine those stocks are where many in China have got rich from, at least on paper
Losing that wealth may not sit well them, and certainly does not bode well for future investment
The Chinese real estate market band building practices is one of the more fascinating aspects of the Chinese economy.
There is a danger when the powerful dictator of a country is not given facts good and bad, GIGO.
Curious what xi and putin actually believe is happening in their respective countries
Xi just isn’t getting enough credit from voters for Xi-nomics!
The article is garbage. The writer pretends conditions are normal.
The reason the China stock market is cratering is because industrial production has ceased. Companies ade strangled ny no sales. Employees have been laid off in the hundreds of thousands. Once vibrant retail streets and malls and stores are shut down.
China has no growth nor potential for growth because the CCP has shut business and manufacturing down on purpose.
https://www.investopedia.com/articles/investing/092415/chinas-stock-markets-vs-us-stock-markets.asp
The Shanghai market is a fourth of the NYSE, but the Chinese GDP is about 80% as big as the US GDP.
In China banks and private equity are probably a bigger factors, although in the US, investment is moving out of the stock market into various private ownership mechanisms.
It’s growing at 5.2%, because Xi says it is.
5% growth reported in China really means they are in contraction. They lie about everything.
Patiently waiting for Gordon Chang’s predictable opinion.
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