FX.co ★ China’s stock market clicking into gear amid investment flood

Citing analysts at Global Research, Reuters reported that foreign investors injected a whopping $12 billion into China’s stock market in the last week of January. Experts say this is definitely a good omen for Chinese stocks.

According to estimates by Global Research, the amount of investments in China’s stock market has soared to a record high since 2015. In the week from January 22-26, Hong Kong-traded Hang Seng jumped by almost 5% on the back of stimulus measures introduced by Beijing to prop up the domestic economy.

Experts say that investors rushed to buy Chinese blue chip stocks taking advantage of their lowest market quotes in the last 5 years. Chinese equities slumped due to investors’ fears over the poor performance of the world’s second largest economy. Market participants are mostly worried about the doom and gloom in China’s property sector throughout 2023.

In late 2023, the People’s Bank of China slashed the requirement for cash that commercial banks are allowed to keep at their reserves. China’s central bank also launched a package of measures to mitigate a liquidity crisis which ailing developers are currently facing. The regulator allocated 2 trillion yuan ($278.53 billion) to purchase their stocks. Another measure is forex interventions to bolster the renminbi and equities of domestic companies.

Analysts polled by Bloomberg believe that the US economy is way more successful than China’s economy. The US benchmark stock indices have been extending their rally in 2024 from 2023. Chinese stocks tumbled to multi-year lows last year. China’s authorities have introduced stimulus measures, though the government’s fiscal policy does not always bear fruit for the reason of the assertive governance executed by Xi Jinping, the general secretary of the Chinese Communist Party.