Investor focus is on the meeting of the leadership of the China Securities Regulatory Commission and other regulators with China’s leader Xi Jinping on the market situation. The news became a powerful support factor for the Chinese market, which has been feeling unsteady lately.
On February 7, mainland China’s blue-chip index rose by 0.85%, and the Shanghai Composite index rose by 1.31% on the stock market. The day before, it jumped by 3.23%, the best result since March 2022. The Hang Seng in Hong Kong grew by 4.04%.
Investors are hoping for decisive measures to support the markets and the economy, promised by the Chinese government, writes Bloomberg. In particular, a division of China’s sovereign wealth fund stated that it will buy more stock exchange-traded funds and will “ensure the stable operation of the capital market”.
Despite a new wave of optimistic headlines about the Chinese authorities’ determined support for the stock market, the reaction of Chinese indices is limited for now. It is still unclear whether any new support measures will be taken, but traders hope this time will be different. Pressure on the authorities in Beijing is increasing: they must act faster and more decisively to stop the crash of stocks totaling about $7 trillion.
Attention is also focused on the meeting of the China Securities Regulatory Commission leadership and other regulators with China’s leader Xi Jinping on the market situation. Bloomberg reported earlier about the plans to hold the meeting. This news also became a powerful support factor for the Chinese market.
What steps could Beijing take to reverse the trend or at least stop the decline? Commented on by Alexander Dushkin, Managing Assets of the International Private Investment Fund:
Alexander Dushkin
Managing Assets of the International Private Investment Fund
Bloomberg notes that there is an important shift in the global markets: investors are pulling billions of dollars out of the “collapsing” Chinese economy and redirecting them to India. For example, Wall Street giants like Goldman Sachs Group and Morgan Stanley.
Over the past two decades, India’s GDP and market capitalization have grown from $500 billion to $3.5 trillion. Morgan Stanley predicts that by 2030, India’s stock market at this rate could become the third largest.