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Why Beijing's billion-dollar aid package won't save the Chinese stock market
According to a report from www.n-tv.de, Chinese securities are doing poorly. The fact that the stock market is plummeting to a five-year low is calling politicians into action. The equivalent of 300 billion US dollars is to be pumped into the market. It is hardly to be expected that Beijing will be able to attract investors with this. The Chinese government plans to use a stabilization fund worth the equivalent of almost $300 billion to support the Chinese capital market, which has come under pressure. This measure provided temporary relief on the stock exchanges. Nevertheless, it is questionable whether this measure will actually attract investors. It can be assumed that the cash injection will initially cause a short-term recovery in the market. …
Why Beijing's billion-dollar aid package won't save the Chinese stock market
According to a report by www.n-tv.de,
Chinese stocks are doing poorly. The fact that the stock market is plummeting to a five-year low is calling politicians into action. The equivalent of 300 billion US dollars is to be pumped into the market. It is hardly to be expected that Beijing will be able to attract investors with this.
The Chinese government plans to use a stabilization fund worth the equivalent of almost $300 billion to support the Chinese capital market, which has come under pressure. This measure provided temporary relief on the stock exchanges. Nevertheless, it is questionable whether this measure will actually attract investors.
It can be assumed that the cash injection will initially cause a short-term recovery in the market. However, the longer-term impact remains uncertain, particularly given doubts about Beijing's economic policies and declining investor confidence in them. The patchy recovery in the world's second-largest economy and a renewed slump in home sales last week have now apparently prompted the Chinese government to take this measure.
Concern about the Chinese economy and the ailing real estate market, as well as high youth unemployment and population decline in the country, have led to a continuous withdrawal of foreign investors. China's economy only grew by 5.2 percent compared to the previous year, which fell short of the official growth target. In addition, the published economic indicators show an uneven growth environment and signs of deflation.
Overall, the future of the Chinese stock market remains uncertain. Investors may remain skeptical of Beijing's economic policies, which could limit the effectiveness of support measures. It remains to be seen whether the short-term market recovery due to the aid package will be sustainable. So far, other measures taken by the Chinese authorities, such as restricting share sales by some institutional investors, have not had the desired effect. The market therefore remains volatile and investors are expected to remain cautious.
Read the source article at www.n-tv.de