Pessimism is deepening as investors see no easy fix to the Chinese economy’s ailments. The property market is mired in a slump, a new crisis is brewing in the shadow banking sector, while economic data continue to disappoint. Steps to boost the market including an interest-rate cut and authorities reportedly asking investment funds to avoid net selling equities have done little to revive sentiment as traders call for more forceful measures.
Worse still, the picture emerging from property agents and private data providers suggest the slump in the real estate market may be far more dire than official reports show. In the latest effort to boost confidence, China’s top leaders pledged to expand domestic consumption and support the private sector in a Wednesday statement, but again lacked details on any new stimulus measures.
“The contagion risks from the real estate sector and trust defaults are a big concern,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “The economy is clearly struggling and it increasingly looks like the government may not have the tools to arrest it.”
The CSI 300 benchmark of onshore shares fell as much as 0.9%, set to erase all gains since the July Politburo meeting, when rhetorical commitments to boost growth had spurred a brief rally. Foreign investors were on track to sell Chinese shares via links with Hong Kong for the ninth straight session.
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The Hang Seng Index and HSCEI gauge are among the year’s worst performers in 92 major gauges tracked by Bloomberg, having lost at least 8% at least each.
