Stock Market Today: China Massively Impacted by Economic Policy Shift

April 26, 2019 | Friday

Stock Market


China's stock market plunged on Thursday, concern that Beijing might reverse on the stimulus measures. That after the previous exceeding than expected economic data.

According to Steen Jakobsen, chief economist at Saxo Bank, the markets went to calm which took its guard off taking the impact of the Chinese economic policy shift.

China as the world's second-biggest economy beats expectations with growth of 6.4 % during the first quarter compared to the same period last year.

Recent statements coming from Politburo of the Communist Party signals on Chinese officials seeing improvement on the growth outlook can feed thoughts that Beijing might start a setback in its stimulus package.

On Thursday, Jakobsen via email suggested China should change its focus to structural reforms from the current economic supports. He believes that it will fade towards outperformance on the Chinese stocks. That with the U.S. dollar and the United States yields surpassing its previous highs.

According to Jacobsen, President Xi is positive on the improvement of performance. China's President is to shift gears towards the consolidation from what they usually call the "global policy panic."

Jacobsen also said, "real risk starts in late July/August." He also added that will happen along with the policy actions and the actual data which will not provide even a bit improvement within the economic growth.

Meanwhile, during the Chinese President Xi's speech on Friday at the opening ceremony of China's Belt and Road forum, he mostly discusses the plan on reforming China's national economy.

President Xi's speech focuses on the concerns of the ongoing trade dispute between Beijing and Washington. According to the President, China will improve its intellectual property protection. That to "stop arbitrary technology transfer." Those are the main points regarding the trade discussions with China's biggest trade partner, the United States.


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