Chinese stocks fall to five-year low on investor pessimism

Based on the results of today’s exchange trading in China, the key index of mainland China CSI 300 decreased by 0.9%, reaching a five-year low. At the end of the month, this index decreased by 6.3%. According to experts interviewed by Bloomberg, investors are not confident that the authorities’ plans to support the financial market will be sufficient in the current economic conditions in China.

Previously it became knownthat the Central Bank of China will reduce the reserve rate for commercial banks by 50 basis points from February 5 – this should free up about 1 trillion yuan ($140 billion) for the financial market and stimulate economic recovery.

However released yesterday macroeconomic statistics worried investors. At the end of January, the manufacturing activity index (PMI) in China amounted to 49.2 points, the figure has been declining for the fourth month in a row.

“Currently, investor sentiment towards China remains quite pessimistic. Even after a slight increase caused by the authorities’ plans to support the market, a new sell-off (of shares) follows. “Kommersant”“,” says Wei-Serne Lin, managing director of the Singapore branch of the Swiss financial company Union Bancaire Privee. “It is still completely unclear to what extent China’s structural problems can be solved and how the country’s leadership is disposed towards economic recovery.”

Negative investor sentiment towards China was reflected in several other markets in the Asia-Pacific region. The Australian ASX 200 – Hong Kong’s Hang Seng lost 1.4% today, the South Korean Kospi – 0.1%, and Taiwan’s Taiwan SE – 0.8%.

Kommersant wrote about the results of the development of the PRC economy in 2023 in the material “China is no longer in a hurry”.

Evgeny Khvostik