China’s market rescue is failing as Xi holds back on stimulus - Times of India
China's regulators are struggling to attract global funds to invest in the country's stocks, as market-boosting efforts alone are not enough to offset concerns about the lack of stimulus to support economic growth and ongoing political tensions.
China's economy is facing challenges with slowing growth, rising debt, tumbling stock markets, and a property sector crisis, and some analysts believe that heavy-handed government intervention and a lack of confidence are underlying causes that cannot be easily fixed. However, others argue that China's problems are solvable and that it remains a superpower despite its considerable problems.
Global investors are urging China to increase spending in order to revive its struggling economy and address the deepening property crisis, as modest interest rate cuts and vague promises of support have failed to restore confidence in the market. Investors are demanding more government stimulus before considering a return, and the lack of a policy response from Beijing has raised concerns among fund managers. The wishlist of investors includes increased government spending, particularly for local governments and banks, as well as measures to address the property sector crisis and improve communication regarding private business interests.
China's regulators are implementing new measures to attract investors to the country's securities markets, but it remains uncertain if these reforms will be sufficient.
China's securities regulator will gradually restrict initial public offerings in order to minimize market disruptions, potentially impeding the country's efforts to improve its industrial structure and impacting startups' access to capital markets.
Global investors are skeptical of China's ability to stabilize its financial markets, with many predicting that economic pressures will cause the offshore exchange rate of the yuan to reach record lows.
Investors are becoming increasingly concerned about the state of China's economy as informal gauges, such as PMI surveys and soft surveys, indicate a deep-seated confidence problem and a potential miss of the country's 5% growth target this year, leading to a retreat from global assets exposed to the slowdown.
China's economic slowdown is causing alarm worldwide, with countries experiencing a slump in trade, falling commodity prices, and a decrease in Chinese demand for goods and services, while global investors are pulling billions of dollars from China's stock markets and cutting their targets for Chinese equities.
China's attempts to stabilize its stock market through new initiatives and measures have failed as a brief rally fizzled out, reflecting concerns over the nation's economic health.
US companies are becoming increasingly hesitant to invest in China due to concerns over new anti-spying laws, competition from state-funded firms, and the country's economic challenges such as deflation and a property crisis.
Investors are avoiding global stocks with significant exposure to the Chinese market due to concerns over China's property slump and its impact on the economy, causing the MSCI World Index to recover to just 2% below its July-end figure.
Weak governance and poor disclosure practices in China's corporate sector are causing international money managers to become increasingly wary of investing in the country, potentially leading to limited access to financing and higher borrowing costs for Chinese companies in the future.
China's macroeconomic challenges, including deflationary pressures, yuan depreciation, and a struggling property sector, could have broader implications beyond its borders, impacting global metal exporters, trade deals, and global inflation; however, investing in China's stocks may offer compelling valuations despite the current downturn.
A retreat of funds from Chinese stocks and bonds is diminishing China's global market influence and accelerating its decoupling from the rest of the world, due to economic concerns, tensions with the West, and a property market crisis.
China's startup world is facing challenges due to slowing growth, geopolitical tensions, and increased regulatory hurdles, resulting in a decline in early-stage investments and foreign participation.
China-focused investment firms have struggled to generate returns for their investors, with only four U.S. dollar-denominated venture capital funds established between 2015 and 2020 able to return all the money invested, reflecting a lack of IPOs and the need for alternative exit strategies such as mergers and acquisitions or general partner-led deals.
China is expected to maintain its benchmark lending rates as oil prices rise and market sentiment is affected; meanwhile, the Federal Reserve's policy meeting, Japan's trade data, and the United Nations General Assembly will also influence Asian markets.
China's regulators are investigating hedge funds and brokerages that use quantitative trading strategies, amid concerns over their ability to profit from share price falls and market volatility.
