2024-02-17 13:32:38
The Chinese stock market and the Hong Kong stock market are the only two markets in the world that have declined for three consecutive years. The picture shows the Shanghai Stock Exchange data picture. (China Photos/Getty Images)
[The Epoch Times, February 17, 2024](Reported by Epoch Times reporters Huang Yun and Luo Ya) The Chinese stock market and the Hong Kong stock market are the only two markets in the world that have declined for three consecutive years. The Chinese New Year holiday is coming to an end, and the international financial community is paying close attention to the rise and fall of the Chinese stock market following the resumption of trading.
Experts analyze that with the “decoupling” of Western countries, the linkage between China’s stock market and global stock markets has been significantly reduced. The collapse of China’s stock market has had little impact on the world, and some countries have even benefited.
Trading experts analyze A-share trends on the first day of the Year of the Dragon
On the first day of trading in the Year of the Dragon, Taiwan stocks opened red. In early trading on February 15, the index soared by more than 600 points, breaking through 18,700 points and reaching a record high of 18,725 points.
On February 13, the Japanese stock market opened its first trading session in the Year of the Dragon, jumping 350 points to closing up 1,066.55 points. The intraday high reached 38,010.69, the first time it broke 38,000 points in 34 years.
On February 19, the mainland stock market will open for the first time in the Year of the Dragon. Whether the Chinese stock market rises or falls has attracted much attention.
Since entering 2024, China’s stock market has been falling, with the Shanghai Stock Exchange Index falling to 2,655.09 points, a five-year low. Before the stock market was closed for the Chinese New Year, with Xi Jinping personally taking action, Central Huijin taking action to protect the market, and the China Securities Regulatory Commission continuously vocalizing support, A-shares finally rose slightly.
Regarding whether A-shares will fall once more following the market opens in the Year of the Dragon, Sun Guoxiang, director of the Institute of Asia-Pacific Research at the University of Nanhua in Taiwan, told The Epoch Times, “We now predict that the Chinese (Chinese Communist Party) government will definitely take certain preventive measures. For example, It may have internally requested the stocks of some state-owned enterprises to prevent them from being sold freely.”
He believes that following the market opened, the selling and fleeing of some retail investors or small investors may not have a great impact on the entire Chinese stock market. What we really need to pay attention to is the trends of foreign capital, including whether foreign capital has sold off and whether it has re-entered the Chinese stock market. It may be a more important factor that truly affects the future direction of the Chinese stock market.
He said that if the trust or confidence of foreign funds in the Chinese stock market cannot be maintained, the Chinese stock market may enter a collapse situation. If the Chinese Communist Party authorities rescue the market, they can only make bigger and bigger holes, because the real solution may be the operation of the market economy. .
During the Chinese New Year, bad news for the Chinese stock market came out once more. On February 13, the fourth day of the first lunar month, Morgan Stanley Capital International (MSCI Inc.) removed 66 Chinese companies from the MSCI China Index in its latest quarterly assessment. This will apply to the MSCI World Index and will be effective at the close of trading on February 29.
Zhang Tianliang, an expert on China issues, analyzed that this means that Morgan Stanley will start selling these Chinese stocks on a large scale on February 29. In this way, the Chinese stock market will plummet following the Chinese New Year.
The latest survey shows that Wall Street is trying to avoid Chinese stocks and move investment portfolios abroad.
Today is not what it used to be. China’s stock market plunge has little impact on the world
According to the latest statistics from Marketplace, if calculated from the high point in 2021, the market value of China’s stock market has evaporated by approximately US$7 trillion. If calculated based on the approximately 200 million registered shareholders in China, this is equivalent to an average loss of nearly US$35,000 per shareholder over the past three years.
Since the beginning of this year, the plunge in China’s stock market has had little impact on the world. Global stock markets are rising, with stock markets in the United States, Japan, Germany, France, Italy, and India all hitting record highs.
Wu Jialong, Taiwan’s general economist, told The Epoch Times, “I was really worried that China’s stock market and economy were not doing well, which would drag down others (other countries). This was a reasonable speculation, but in the past year, I found that it was not the case. Now. China has almost no influence on other countries, has not dragged others down, and has not caused the global economy to decline.”
“In the eyes of the United States, China has reached the point of insignificance. China (the stock market) is falling, but the United States is going up, reaching a record high. The United States, Japan, and Taiwan are all going up near historical highs, and China is going down. Walk.”
Balding, an American economist, told VOA that China’s economy was huge and once had a great influence on the world economy. In the past, the rise and fall of China’s stock market often affected the global stock market, but since the acceleration of Western countries led by the United States, Decoupling from China and reducing dependence on Chinese supply chains and products, and switching to goods manufactured in Mexico, Vietnam, Cambodia and the Philippines, is tantamount to building a firewall between the world and China. The linkage between Chinese stock markets and global stock markets It has also been greatly reduced.
He said, in other words, the description of “China’s economy sneezes and the whole world catches a cold” no longer makes sense.
Wu Jialong analyzed, “(In the past 10 or 20 years), no matter which industry Chinese companies enter, from memory, semiconductors, memory panels, solar energy, and electric vehicles, there is overcapacity, and then it becomes price-cutting competition. Other countries Competitors are squeezed out, and it has been like this all the way.”
He said that with the economic “decoupling” of Western countries, China’s supply chain has been hit, and the pressure of vicious competition on Chinese companies has subsided, and manufacturing companies in other countries have breathed a sigh of relief.
Mainland netizens also said that the 2015 A-share plunge might bring down the world, but this time there was not even a splash, which shows that foreign capital has indeed achieved “decoupling” in the past few years, and the threat to the global economy from the CCP’s financial nuclear bomb has been significantly reduced. Without its threatening power, China’s financial sector is an easy target to be abandoned.
The “decoupling” of Western countries is still accelerating. According to the latest statistics from the Central Bank of China, the total amount of Chinese stocks and bonds held by foreign investors has dropped from 8 trillion yuan at the end of 2021 to 6.6 trillion yuan in June 2023, with a net outflow of 18%. Foreign capital withdrawals reached RMB 80.1 billion and RMB 59.5 billion in the third and fourth quarters of 2023, and have reached RMB 31.4 billion in less than 20 days this year.
The outflow of Western capital from China will also affect the outflow of China’s own capital.
On the contrary, other countries’ stock markets may benefit
As China’s stock market falls, experts believe that Chinese investors may move to other overseas markets, and stock markets in other countries may benefit.
Wu Jialong said, “(China’s stock market plunge) not only did not drag others down, but actually helped others move up. China’s red supply chain and price-cutting competition for others have now completely subsided, so now other people’s lives are much better. , that’s how it comes regarding. So not only does it not drag others down, it actually helps others move up.”
At present, a large number of Chinese investors have begun to turn to Japanese stock markets for safety. On January 11, the trading volume of Japan’s China Nomura Nikkei 225 ETF in Shanghai exceeded 10 times the average daily trading volume in 2023.
Tetsuhiro Nishi, executive director of Nomura Securities in Japan, believes that this trend may continue as uncertainty still exists in the Chinese market, causing capital to flow to the Japanese stock market.
Meanwhile, U.S. emerging market investors are snapping up China-excluding Exchange Traded Funds (ETFs) while dumping China-focused funds.
ETF.com data shows that net capital inflows into eight emerging market (excluding China) ETFs listed in the United States last year more than tripled from the previous year, reaching $5.3 billion. Meanwhile, 55 China-focused ETFs had a combined net outflow of $802 million in 2023. China-focused ETFs have suffered outflows for three consecutive quarters since April last year.
Wu Jialong said, “In the past, we were worried that if China went down, other countries (other countries) would follow suit and be dragged down, right? That’s not the case now. Now, it’s China going down that makes others feel comfortable.”
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