The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
BLOOMBERG
It’s a familiar pattern that’s played out time and again during China’s stock market rout this year: Bold policy steps to rejuvenate the economy spark a flicker of enthusiasm at the start of the trading day but the recovery fails to last and concern swiftly returns to the troubled property sector.
Such was the price action that greeted the government’s latest push to boost growth, which involved a rare increase in the budget deficit ratio and President Xi Jinping’s unprecedented visit to the central bank.
The failure to sustain gains suggests skepticism still lingers. And driving that thought home was builder Country Garden Holdings Co’s first dollar bond default, the latest setback for the ailing industry.
Market watchers saw limited support from the latest measures beyond short-term sentiment boost. The impact on corporate fundamentals may be limited, Morgan Stanley strategist Laura Wang wrote in a note, adding that the market will need “further positive developments” to ensure a sustained sentiment recovery.
The CSI 300 Index of mainland shares closed just 0.5% higher, more than halving its earlier advance. The Hang Seng China Enterprises Index erased a bulk of its 3.5% gain to climb 0.9%.
The moves come after the nation’s legislature approved a plan to raise the fiscal deficit ratio for 2023 to about 3.8% of gross domestic product from the 3% set in March, which includes issuing additional sovereign debt worth 1 trillion yuan ($137 billion) in the fourth quarter to support disaster relief and construction.