An investor looks at an electronic board showing stock information at a bankruptcy house in Nanjing, Jiangsu province, China.
Reuters
BEIJING – Mainland Chinese stocks have fallen in recent days as authorities set a relatively low GDP target and signal a shift away from policies that mean maintaining the economy gone after a pandemic coronavirus infection.
The Shanghai concentration has fallen more than 5% over the last five trading days, with losses accelerating this week to their lowest level since December, according to Wind Information. Other mainland stock indices like the Star 50, which tracks big names on the tech stock board, and the CSI 300 are down nearly 8% or more over the last five trading days.
The indices rose Wednesday after U.S. markets recovered overnight from a recent sell-off.
After the huge gains of the Chinese stock market over the past six months, investors are focusing on two things, Tai Hui, chief market strategist of Asia at JPMorgan Asset Management, said Wednesday.
One concern is the return of supportive fiscal and monetary policy based on comments from China’s annual parliamentary meeting; the other is the sale in the U.S. market, especially in high-tech flight stock, he said.
Top officials from the People’s Bank of China and a banking regulator have warned this month about financial market risks. Their comments coincide with the biggest political event of the year in China, the “Two Sessions” parliamentary meeting.
China sets ‘very conservative’ GDP target
As part of the rally, Chinese Premier Li Keqiang announced Friday that the country would aim for GDP growth of more than 6% for the year, at the low end of estimates by many economists. Li said new bonds would not be issued to respond to the pandemic and that deficit and inflation targets would be lower than last year.
In a report Monday, Citi analysts called the GDP growth target “very conservative” and said it would put pressure on policymakers to achieve rapid growth, allowing them to take tougher steps to keep risks at bay. stocks and real estate market.
As a result, they expect authorities to limit growth in lending, limiting the amount of capital that can go into stock purchases. Citi analysts predict that the CSI 300 could fall 10% from its levels on Friday, March 5th.
The CSI 300 was down about 4% from Friday’s close as of noon Wednesday.
Economists in China have been keeping a close eye on U.S. markets, where government stimulus and rising 10-year U.S. Treasury yields have raised some concerns about the risks of “inflation taken -into. “So far, domestic measures of such a price increase are still on the move. China reported a 0.2% decline in the consumer price index for February from a year ago and an increase of 1.7% in a producer price index.
Long-term investment issues
Instead, market strategists are drawing attention to long-term opportunities in Chinese stocks due to recent sales and announcing details for the country’s five-year development plan that will start this year.
The development roadmap, known as the 14th five-year plan, aims to boost China’s technological capabilities, increase spending space in stimulating economic growth and address issues such as depopulation. aging in China.
Xuan Wei, China Asset Management’s chief strategist, said in a note that he is optimistic in the medium and long term on investment opportunities in technology, consumer trends and medicine.