Asian Markets Are Getting Jealous
Life after corona has been bumpy to say the least for the Shanghai Stock Exchange (SSE). China’s markets fell 8% in March as regional investors watched American counterparts lap up trillions in government stimulus. President Xi is looking the other way.
Unlike the US Federal Reserve calling monetary stimulus “unlimited,” the People’s Bank of China is cautious of its volatile markets and large pile of debt. Unlike the US Federal Reserve diving all the way down zero, the People’s Bank of China says it doesn’t want to “fire all its bullets at once” when it comes to interest rates. The two central banks are worlds apart!
Investors, however, are simpler people. Irrespective of color, creed, religion, or gender, investors only want one thing; for stocks to rip!
A slew of small fry policies have been unveiled this week aimed at making that happen in China, like, for example, short-term interest rates cuts. They fell the most in five years to help get businesses back on their feet with easy financing. Cash injections were also floated. However, none of these measures make your heart beat faster for buying shares of Tencent or Alibaba.
Faith is starting to dwindle, and stocks are starting to fall. Investors are now pricing out what they had previously priced in, hopes and dreams of mega rate cuts and trillion-dollar aid packages.
“The policy stance during the virus outbreak has given many investors a reality check,” said Yu Yingbo, money manager for the Fortune Fund. Western investors won’t touch China until there’s peace in markets domestically. How long could that take?