(TrendHub — Posts by ICARUS, Reporter) The Chinese government is considering injecting approximately 372 trillion won (2 trillion yuan) in an effort to stabilize the stock market, Bloomberg reports. This move comes as a response to the recent sharp decline in the Chinese stock market, involving strategies such as stock accumulation through the Hong Kong Stock Exchange, utilizing offshore accounts of state-owned enterprises in China, and investments in domestic stocks through the Securities Finance Corporation (CSFC) and Central Huijin Investment Ltd.
China’s economy is currently impacted by a variety of factors including the real estate crisis, consumer sentiment downturn, a sharp decrease in foreign investments, and uncertain policy decisions. Particularly, the real estate market seems to have entered a long-term adjustment phase, with chronic oversupply and demand slowdown, worsening financial conditions of real estate firms, and weakening price increase expectations, suggesting a continued slump in 2024. The Chinese government is advancing plans to provide unsecured bank loans to construction firms to overcome the real estate crisis.
Samsung Securities presents a neutral outlook on China investments for 2024, expecting a mild economic recovery and index rebound in the first half of the year as China’s economic policy shifts towards growth. However, concerns are raised about limited stock market momentum due to underperforming potential growth rates, limited stimulus intensity, and the possibility of escalating uncertainties in the US-China conflict. The theme for 2024 is ‘Advanced Technology’, focusing on areas like Huawei’s growth, semiconductor software localization, and the robot value chain.
Despite these policy efforts and economic forecasts, it remains uncertain whether the Chinese government’s massive funding will suffice for long-term market stability. Persistent challenges such as the real estate crisis, consumption sentiment downturn, and the decrease in foreign investments continue to burden China’s economy and financial markets.
Dual Insight Analysis:
Positive Investment Perspective:
- Turning Crisis into Opportunity: The proactive market intervention by the Chinese government could temporarily stabilize the stock market, providing a buying opportunity for investors. Especially, the strategy of selecting stocks with long-term investment value in the face of declining prices can be effective.
- Benefits from Policy Support: Strong market intervention by the Chinese government could benefit specific industries or companies, positively impacting investors in those sectors.
Negative Investment Perspective:
- Questions on Sustainability: There are doubts whether the Chinese government’s massive financial injection can stabilize the market in the long term. This increases the uncertainty of investments, posing risks especially from a long-term perspective.
- Other Economic Adversities: Various economic challenges surrounding China, such as the real estate crisis, a downturn in consumer sentiment, and a decrease in foreign investments, could offset the effects of government financial intervention and negatively impact the stock market.
Disclaimer:
This article is intended solely for information purposes. It should not be interpreted as any form of investment advice or financial consultation. TrendHub News does not bear legal responsibility for the content of the article. While the provided information is based on accurate and reliable sources, market trends may change over time. All investment decisions should be made under personal responsibility, and this article should not be the sole basis for investment decisions. Consulting with a professional is recommended before making significant investment decisions.