After losing a whopping 1,500 billion dollars in value in two sessions, today Hang Seng closed with a rise of 9% (it had lost 11%) and Shanghai by 3.5% (it had lost 7%). 6%) thanks to the Chinese government’s promise to support the markets. The Hang Seng China Enterprises Index rose 13% today, the biggest leap since the global financial crisis that supported the two best-selling sectors previously, real estate and technology.
Alibaba group jumped by 27%, Tencent by 23%, Evergrande by 11.21%. The race to buy started after the intervention of President Xi Jinping’s right-hand man, Vice Premier Liu He, the head of general economic policy, as well as the man of long and exhausting negotiations with Donald Trump when he was US president, on the war of pre-Covid duties. The politician promised that the government “will revive the economy in the first quarter, stabilize the stock market and support the listing of securities overseas,” wrote the state agency Xinhua. This sheds light on companies. Chinese listed on Wall Street (the ADRs), which sent the Nasdaq into the red since the US threatened China to delist them if the latter sells weapons to the Russians.
Deputy Prime Minister Liu He also touched on a very sensitive issue, which concerns the government’s tightening on the tech sector, explaining that the Communist Party “will try to solve the problems that have plagued the market, in particular concerns over Beijing’s technological repression” , saying efforts to “rectify internet platform companies should be completed as soon as possible.” The government also expressed its opinion on new policies to manage the risks of real estate groups, indicating then, writes Bloomberg, that the regulators of China and the United States have made progress on the issue of Chinese shares listed on US markets.
The Central Bank of China and the Banking and Insurance Regulatory Authority have followed the vice premier’s lead closely by pledging to ensure stability in the capital market, with a “proactive” monetary policy in the first quarter when new loans grow appropriately “. A coordinated move that underlines the authorities’ determination to keep the bar straight on supporting the economy. The difficulty of the real estate system, in turn tightened by the government to cut the leverage of the brick groups, starting with the giant Evergrande, with one foot in default, has kept investors away. And the lockdown of two of the country’s most important industrial and financial areas, Shenzhen and Shanghai, has put the markets on alert.
And if the managers were negative on investments in China yesterday, due to strong uncertainties about the country’s future, this morning’s broad intervention is already changing the tone of the comments. “The dry sell-off we saw was from the financial crisis and the macro real estate data is looking in that direction. And even if this action does not signal the end, we can at least expect more stability from the markets in the coming weeks,” wrote Li Weiqing, manager. by JH Investment Management.
“Compared to the pessimism of the previous days, now everyone is rushing to buy shares at a discount,” wrote Castor Pang, head of research at Core Pacific Yamaichi. “The market was really oversold and irrational in this dramatic defeat,
Even with the latest rebound, some observers argue, however, that it is still too early to declare the crisis over, maintaining a wait-and-see position if the promises of the policy then materialize into real measures. UBS cut the country’s expected 2022 GDP from 5.4% to 5%, while JP Morgan earlier this week called several Chinese tech groups “non-investable” in the short term. The markets remain cautious also because today the Fed will raise rates (0.25% expected) for the first time in over three years and this will give some annoyance to the heavily indebted Farest companies in the greenback. (All rights reserved)
