China’s stockmarket intervention is a political “red-flag”

The Economist writes “Lost in all the drama about the (Chinese) stockmarket is that it still plays a surprisingly small role in China. The free-float value of Chinese markets - the amount available for trading - is a third of GDP, compared with more than 100% in developed economies. Less than 15% of household financial assets are invested in the stockmarket: which is why soaring shares did little to boost consumption and crashing prices will do little to hurt it. Many stocks were bought on debt. But this financing is not a systemic risk; it is just about 1.5% of total assets in the banking system. If economic stability is not in peril, why then the panic? The most compelling explanation is politics. The government has staked much credibility and prestige on the stockmarket. The sudden end to the rally is the first major dent in the public standing of the Xi-Li team. It shows that the Communist Party, powerful though it may be, cannot indefinitely bend markets to its will.” (VIEW LINK)


Livewire News brings you a wide range of financial insights with a focus on Global Macro, Fixed Income, Currencies and Commodities.

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.