Epoch Times: China Buys Equities

February 27, 2024

Beijing’s efforts to stimulate the economy

Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Epoch Times in an article — by Indrajit Basu, “Chinese State-Backed Stock Support Limits Downside, but Doesn’t Reassure Foreign Investors” — regarding China’s state-backed buying of domestic equities .

Sluggish momentum

China’s sluggish economic momentum has spurred policymakers to ramp up stimulus efforts. Beijing’s recent macro measures aim to bolster growth by supporting the real estate sector, adjusting foreign policy toward the U.S., and expanding the PBoC’s balance sheet alongside targeted rate cuts. However, these steps alone may not be sufficient to sustainably boost domestic demand. Beijing must demonstrate a stronger commitment to growth, address policy volatility, and provide more substantial fiscal support. The housing sector remains pivotal for China’s economic prospects, although deflationary pressures persist. While Chinese equities may appear undervalued and have seen government intervention, a structural improvement in the outlook requires more significant measures which we may see later this year🐲

Article excerpts are below:

“China’s crisis-mired property market remains a key concern, with weak sales, default risks, and a consensus among major financial institutions projecting a continued slump in 2024. Despite government efforts, the pessimistic outlook signals ongoing economic challenges,” Michael Ashley Schulman, chief investment officer at California-based Running Point Capital….He adds that while recent initiatives provided short-term respite, investors are nonetheless concerned about long-term economic prospects. Six months of straight outflows, “totaling $30 billion in foreign institutional sales of mainland Chinese equities,” suggest ongoing worries.

China stimulus
China’s Stimulus — Graphics by Yrtist.com

A little fragrance always clings to the hand that gives the roses.

Chinese Proverb

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