2024-02-10 08:03:12
Shares of Chinese companies have accelerated their decline in the last week; the Shanghai Composite Index showed its worst result in five years as a result of panic sales and forced liquidation of individual transactions, Day.Az reports with reference to Lenta.ru.
On Friday it fell 1.5 percent, and at the end of the week the fall was 6.2 percent – this is the worst result since October 2018. China’s main CSI 300 index closed 1.2 percent lower, hitting a new low since January 2019.
Chief Economist of First Seafront Fund Management Ian DeLong emphasized that the downward trend in the market is only intensifying and acquiring the character of a “snowball”. State investors tried to stop the collapse, for example, exchange-traded funds associated with the Central Huijin fund actively bought shares in the last hours of trading.
Dennis Young, a professor of business administration at the Darden School of Business at the University of Virginia, believes that such measures will not restore the confidence of global investors, and it will not be possible to resort to them indefinitely. According to him, Beijing should solve the fundamental problems of its economy, and not douse the fire with liquidity.
Analysts at Morgan Stanley agree with this approach, pointing out that excitement over government stimulus has proven short-lived and economic data continues to support pessimism.
Earlier, experts noted that the decision of the People’s Bank of China to reduce the reserve rate by 50 basis points for commercial banks from February 5 encouraged investors because such a measure allows institutions to free up about a trillion yuan ($140 billion) to support the market.
But macroeconomic statistics released later overshadowed the positive effect. The manufacturing activity index (PMI) also disappointed. After the fourth consecutive monthly decline, it reached 49.2 points (a reading below 50 points indicates a decline).
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