Economic Watch: Chinese shares hold ground despite broader sell-offs elsewhere

0 Comment(s)Print E-mail Xinhua, March 17, 2020
Adjust font size:

BEIJING, March 17 (Xinhua) -- Chinese stocks have remained relatively calm after U.S. and European shares saw dramatic falls overnight due to coronavirus-linked fears.

ChiNext Index, China's NASDAQ-style board of growth enterprises, gained 0.36 percent to close at 1,917.7 points Tuesday.

The benchmark Shanghai Composite Index dropped 0.34 percent to 2,779.64 points and the Shenzhen Component Index closed 0.49 percent lower at 10,202.75 points Tuesday.

Bolstered by government announcements of increased investment in "new infrastructure," shares related to ultra-high voltage, 5G networks and semiconductors helped pull China's stock markets away from a deep slump.

Compared with overseas markets, the decline in the Chinese A-share market was one of the smallest, chief economist of Essence Securities Gao Shanwen noted in a research report.

U.S. stocks opened sharply lower Monday with the S&P 500 index declining 8 percent shortly after the opening bell, triggering a key circuit breaker that halted trading for 15 minutes. It was the third time that the circuit breakers have been tripped since last week.

Analysts attributed the relatively calm performance in the Chinese stock market to the country's effective curb of new COVID-19 infection cases and the picking-up of economic activities across the country.

The Chinese mainland reported 20 newly imported cases of the novel coronavirus disease, and no new locally transmitted cases outside Hubei Province Monday, according to the National Health Commission.

China's economy will return to normal in the second quarter as government support measures to mitigate the impact of the epidemic take effect, the National Development and Reform Commission said Tuesday.

The recent fluctuations were mainly affected by overseas markets, and China's financial market is relatively sound with a steady foundation for long-term growth, said Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission Tuesday.

Value investments are encouraged to be added in wealth management funds and insurance funds on the preconditions of compliance, Xiao added.

The lingering global routs reflected the fear in the peripheral market, which made the value of China's A-shares in global asset allocation stand out considering the resilience and potential of the Chinese economy, Ren Zeping, chief economist of Chinese property developer Evergrande, noted.

Yao Yudong, a researcher with the Dacheng Fund, ascribed the tumbles of U.S. shares to market fears over the global economic slump and particularly the possible downturn of the U.S. economy, saying there was no need for A-share investors to overreact.

The Chinese economy would soon get rid of the impact of the outbreak as the relatively loose monetary policy, sound financial system and the growing stimuli from capital reform were expected to offer the world's second-largest economy solid support, he said.

There is still room for adjustment in China's monetary and fiscal policies, as Europe and Japan had negative interest rates for an extended period, and the United States had limited space for interest rate cuts, Gao Shanwen noted.

With the outbreak already under control on home turf and more businesses resuming production, the Chinese economy would swiftly recover, Gao added.

Considering the lack of high-quality assets worldwide, Chairman of Foresight Fund Chen Guangming took the relatively low valuations of Chinese assets as another propeller for China's equity market.

While the market fears sent investors searching for safe havens worldwide, local analysts foresaw the uncertainties with the Chinese market as the upheavals in overseas stock markets might spread to the Chinese shares if overseas investors were forced to sell for liquidity, according to Guan Tao, former head of the international payments department at the State Administration of Foreign Exchange.

If not effectively contained outside China, the novel coronavirus might inflict further damage on global industrial chains, which would, in turn, hamper China's business resumption, he said.

In that case, China would face a tougher task in steadying its economic growth through imports and exports as well as foreign investment, Guan noted.

At the State Council's executive meeting held last Tuesday, China unveiled a string of measures to keep foreign trade and investment stable, including shortening the negative list on foreign investment and encouraging financial institutions to increase foreign trade loans to cope with the impact of the epidemic.

"Keeping foreign trade and investment stable is vitally important as the Chinese economy has been deeply integrated into the world economy. We must implement targeted policies to arrest the slide in foreign trade and investment, to forestall damage to the wider economy," Premier Li Keqiang said at the meeting. Enditem

Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from