China’s Concern over Pandemic Spread
Chinese stock markets fell low subsequently after the protests showcased by Chinese protestors who urged the Government to ease Covid restrictions.
Chinese Government had earlier suggested that restrictions shall not be implemented strictly. However, due to the rising number of Covid cases, the Government is forced to implement strict Covid policies.
Similarly, the world was hoping that China will bring down Covid restrictions, and in this hope, markets were reacting positively.
However, very recently, the Chinese Government has clearly mentioned that it will proceed with imposing strict restrictions as the global pandemic is growing. Resultantly, protests are taking place throughout China against Covid restraints.
Low Sufferings in Chinese Stock Markets
CSI 300 Index of China saw its value decline by 2.7% in the initial hours of trading. Later the day turned out to be the index’s worst day of November.
Similarly, Hong Kong’s benchmark index, Hang Seng, saw its value reduced by at least 4.2%. Meanwhile, Peoples Bank of China showed its intention of reducing the ‘required reserve ratio (RRR)’ of the country’s banks.
It said that aid of over 500 billion Yuan shall be provided to the national economy so as to help the deteriorating economy.
As a result of China’s central bank’s announcement, national fiat inflicted more pressure. It was noted that the value of the Chinese Yuan against the USD fell as low as 1.1% (approximately 7.2435 per dollar).
Currently in China concerns are growing suggesting instability in the national economy. Consequently, the country’s exports may not seem to be opened any sooner.
It is the rarest occasion that civil disobedience can be witnessed in China against the ruling regime of President Xi Jinping. However, frustrations within the Government and the public are growing.
The Chinese President had in fact signed the Covid policy which guaranteed zero-tolerance in policy restrictions.
Real Estate Sector Crisis
In a few days’ time, the number of Covid infected victims in China has gone past an alarming level of 40,000 on Sunday alone. It was on Monday that widespread strict lockdowns were imposed to prevent public movement.
In response to Covid restrictions, trade markets in China continue to respond negatively. Almost every sector, including tech and real estate, collectively declined by 3%.
There was a significant drop in the value of shares belonging to Chinese tech giant namely Dahua Technology Co. Similarly, the telecom sector too witnessed value declines.
It was due to these two sectors’ value decline that Hong Kong’s benchmark index, Hang Seng Tech, too edged down by approximately 2%.
In response to the Hang Seng Tech Index’s fall, the other major Chinese index of Hang Seng Mainland Properties fell by 4%.
While the situation for the Chinese stock markets is moving in the negative zone, the US markets are being driven upwards.
It is due to the positive news coming in favor of the interest rates as confirmed by the Feds. With the interest rates going down, the situation will become quite promising for the US stock markets.
More investors will be joining the stock markets because they will have more money to invest. Until now, the investors had been eager to manage their budgets in the most effective manner.
With the interest rates pressure and the inflation rates going down, the stock markets in the US are recovering.