ECB stimulus U-turn leaves markets unimpressed
Last week, we wrote about the impressive 25% market recovery the Chinese stock market had witnessed since the beginning of the year. This week, the Chinese leadership demonstrated that it dislikes stock market exuberance at least as much as it does the credit excesses of the shadow banking sector. A ‘sell-note’ on one of China’s stock market darlings by a government-owned stockbroker caused market speculators to rush for the exit and sent the stock market down 4% in a single day.
Dear Donald, this is how global trade actually works
Global economic activity has slowed. That is no longer a fear in the back of investors’ minds: it is a reality. Into the end of last year, stock markets worked themselves into a panic over the prospect of a slowing global economy and sold off en masse, as if a looming worldwide recession had become all but certain. Now however, with global economic conditions actually slowing, asset markets around the world have recovered to much more reasonable levels. Regular readers will know that this is in line with what we had anticipated at the end of last year: “markets’ fear narrative became almost apocalyptic”, the reality turning out to be dreary but not dire.
China’s expansion focus turns inward
The annual meeting of China’s top legislative body is now in the middle of its session. The National People’s Congress began on Tuesday (5th) for the opening of this year’s session, which will last roughly two weeks and see delegates vote on key pieces of legislation. As well as the customary law-enforcement crackdown, so far this year we have seen some interesting talking points emerge.
Most of these have come from the government’s work report, delivered by Premier Li Keqiang to the Great Hall of the People on opening day. The headline-grabber is the cut to economic growth targets: this year China is aiming for GDP growth in the 6-6.5% range, lower than in previous years. This does not come as too much of a surprise. 2018 was China’s slowest year of growth since 1990, even going by official (read ‘dubious’) figures. And unfavourable conditions both at home and abroad have made lofty growth targets unfeasible.