ADVFN Logo ADVFN

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for default Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.

China Is In A Vicious Circle

Share On Facebook
share on Linkedin
Print

While the S&P 500 continues to rise and the overall U.S. economy remains resilient, pessimism about China continues to grow, with Chinese stocks in Hong Kong falling to their lowest level in 19 years.

© Image copyright numb3r

What could account for this disparity?

In short, different geopolitical and economic contexts. While business activity continues to hold up in the U.S. and expectations of a monetary turnaround are rising, the Asian dragon is suffering in a big way.

To begin with, analysts question the fact that the Chinese economy will grow by 5.2% in 2023, above Beijing’s official target of around 5%, because the country’s GDP was reported in real terms.

It is mentioned that as consumer and factory prices fell last year, the price adjustment actually inflated the growth rate. The GDP deflator is now the largest “inflator” of the GDP calculation in 14 years.

In addition, news that China is considering issuing 1 trillion yuan in new special sovereign debt, the fourth such sale in the last 26 years, did little to help the market mood.

The PBOC’s decision to leave its policy rate unchanged, while the unemployment rate stands at 14.9%, also dampened investor enthusiasm.

Finally, there are fears of further geopolitical turmoil due to:

– Growing tensions with Taiwan due to the victory of the independence movement in the elections.

– Victory of a candidate with hostile rhetoric towards China in the U.S.

Overall, Chinese stocks could remain under pressure due to negative expectations about the real estate market and the economy in general, while U.S. stocks maintain the bullish trend (for now).

The good news is that if the Asian dragons continue to slow down, commodities, mainly oil and gas, could fall in price as demand slows. But whether this happens depends primarily on the government.

If Beijing decides to stimulate the economy and deflation returns to inflation amid a pickup in consumer and business activity, things could go awry.

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com