Asset Classes

Free investment financial education

Language

Multilingual content from IBKR

Close Navigation
Learn more about IBKR accounts

Silk Roadblocks

Posted August 21, 2023 at 12:00 pm
Finimize

What's going on?

China’s giving investors a pep talk, but it’ll have to overcome some serious obstacles to boost their confidence.

What does this mean?

2023 was pegged as China’s comeback year – a chance for the country to shake off the lingering pandemic blues and regain its mojo. But it’s been more of a wobble than a confident strut so far, with consumer spending and the property market still on shaky ground. That’s spilled over into markets too, with the CSI 300 – China’s main stock index – dipping 3% this year. To try and get investors back on side, Chinese regulators are rolling out the red carpet: slashing broker transaction fees, mulling longer trading hours, and giving a thumbs-up to share buybacks too.

Why should I care?

The bigger picture: Shaky foundations.

While these moves might soothe market jitters, they’re really just papering over the cracks. Just take a gander at China’s property sector, which makes up about a quarter of the country’s economy. Nearly half of state-owned property developers are in the red for the first half of the year – stoking worries the housing crisis is spreading from the private sector to companies that have government backing too. And that’s bad news: if state-owned companies can’t finish the projects that private companies dropped, it could further dent homebuyer confidence. That means that all eyes are now on the central bank’s recent hefty interest rate cut, in the hope that it’s the magic elixir the market needs.

Zooming out: Prophets of doom.

China once set its sights on a 5% growth target for 2023, and at the time, that goal seemed almost unambitious. But even that modest aim might be out of reach now, and banks are already dialing back their optimism: Nomura’s betting on 4.6%, Morgan Stanley’s at 4.7%, and JPMorgan’s chimed in with 4.8% – the best of a bad lot.

Originally Posted August 18, 2023 – Silk Roadblocks

Join The Conversation

If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Leave a Reply

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Finimize and is being posted with its permission. The views expressed in this material are solely those of the author and/or Finimize and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

IBKR Campus Newsletters

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.