Despite the weakness of the economy … Chinese stocks rise

Investors closely monitor the performance of the Chinese stock market amid a state of remarkable contradiction; While the main economic indicators show clear signs of weakness, the shares continue to record striking heights, which raises the attention of followers inside and outside China.

Individuals and companies invest their money with caution, taking advantage of the alternative investment opportunities provided by the stock market, especially with the decline in some traditional channels such as the real estate sector and the weak returns on deposits. Analysts closely monitor the relationship between government policies and the financial sector, with a focus on the market’s ability to continue to grow without high risk. At the same time, optimism about emerging industries is an additional factor that motivates investors to participate strongly, which gives momentum to the local market. A report issued by “Bloomberg” indicated that the Chinese economy is reeling under the weight of customs tariffs and the real estate crisis, yet the shares continue to climb, raising doubts about the sustainability of this rise. Last month alone, local stocks added nearly a trillion dollars to its market value, while the Shanghai boat index reached its highest level in a decade, and the CSI 300 index increased from its lowest level this year to more than 20%. On the other hand, modern economic indicators were almost, from consumption trends, home prices, to inflation, as warning signals for investors. This rise in the stocks turned the wealthy investors to the financial market in light of the lack of investment alternatives, while some analysts warn of the possibility of a bubble. Nomura Holding has warned of “excessive optimism”, while TS Lombard has classified the disparity between the shares’ rise and the economy and the economy is a confrontation between “optimists in the market and the pessimists about the macroeconomic economy.” “A rising market will not be sustainable if inflation remains close to scratch, and the companies’ ability to pricing a strong wind is very opposite due to the poor local demand.” Chinese journalist Souad Chen Hwa indicates that the stock market is mainly due to several factors, most notably:
1. Strong support from government policies, which strengthened investor confidence.
2. The funds are transformed towards stocks after the recession of the real estate market and the low returns of deposits, which made the shares an attractive choice.
3. Optimism about emerging industries such as new energy, artificial intelligence, and advanced manufacturing, which reflects investor confidence in the transformation of the Chinese economy.
4. The recovery resulting from the decrease in previous assessments, as any positive factor has become sufficient to launch a strong bounce in the market. And the continuity of the rise in stocks, indicated that the matter depends on several basic conditions: the success of converting policies from expectation to implementation, dealing with a smooth real estate crisis, improving external relations, and the ability of the market to create a positive confidence cycle that enhances consumption and investment. On the other hand, the CNBC report indicates that the normal Chinese families, which enjoy With standard savings of about 160 trillion yuan (22 trillion dollars), it is investing part of its excess deposits in the stocks, where retailers represent about 90% of daily trading in local markets, compared to 20-25% on the New York Stock Exchange. Joe Yarq, head of the global markets department at Cedra Markets, explained that the recent indicators contributed to remarkable heights in The stock market, with some indicators touched levels that we have not seen since 2015, despite the weak inflation rates that are close to scratch and the decline in producers ’prices for the thirty -fourth month, respectively, which reflects the state of economic shrinkage and the weakness of local consumption. He also indicated the role of individual investors in strengthening these heights, especially in the technology sector, driven by the global interest in artificial intelligence since last February, which made evaluations Chinese stocks are more attractive compared to the American market. However, he warned of the possibility of a price bubble in the event of continued recession or escalation in customs policies, despite his expectation that the current momentum will continue in the short term, especially in the technology sector associated with artificial intelligence. (Sky News Economy)