China’s stockmarket bounces as the economic recovery quickens

China’s strong economic recovery has propelled local stockmarkets higher, with the CSI 300 index up 12% for the year-to-date.

Almost half a billion people are going on holiday, says Bloomberg News. China’s October Golden Week saw 425 million people travelling during the first four days alone, according to official figures. That is almost 80% of last year’s level. China has gone six weeks without a reported Covid-19 case and the holiday is a key test of what life will look like beyond the pandemic. 

China’s economy could do with a boost from consumers, Françoise Huang of Euler Hermes told the Nikkei Asian Review. Its strong recovery in the second and third quarters has been led by construction and infrastructure, with consumption “somewhat sluggish”. The OECD forecasts that China will grow 1.8% for 2020 as a whole, the only G-20 nation to expand this year. 

Economists polled by Nikkei agreed that if Trump is re-elected then US-China trade ties will worsen, but were divided on the likely impact of a Biden presidency. Some argue that Biden would cut tariffs and ease sanctions on Chinese technology firms, while others point to a growing bipartisan consensus in Washington that favours a tougher line on China. 

China’s strong economic recovery has propelled local stockmarkets higher, notes Chong Koh Ping in The Wall Street Journal. The CSI 300 index is up 12% for the year-to-date, comfortably surpassing the S&P 500’s 3.6% gain. Shares in consumer-facing businesses such as tourism, beverages and carmakers have rallied as the pandemic has been brought under control. 

Investors scared of the turbulence of the US election are betting that Chinese onshore markets will prove “somewhat insulated” from broader geopolitics in the coming months. China’s yuan rose by 4% against the dollar in the third quarter of 2020, its best quarter since 2008, as foreign money poured in. Expect “more gains” to come in local markets. 

Recommended

The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Flexible working: don't rush your staff back the office
Small business

Flexible working: don't rush your staff back the office

The government is urging people to get back to the office. But there are good reasons for many small businesses to embrace flexible working.
25 May 2022
Let’s adjust to living with Covid and get Britain back to work
UK Economy

Let’s adjust to living with Covid and get Britain back to work

The Covid-19 era is over, leaving a stagnant and lethargic workforce in its wake. It’s time to wake up, says Matthew Lynn.
25 May 2022
Should you be worried about energy windfall tax proposals?
Energy

Should you be worried about energy windfall tax proposals?

Calls have been growing for a windfall tax on UK oil and gas producers. It's a popular idea, but is it a good one? And what does it mean for investors…
24 May 2022

Most Popular

Everything is collapsing at once – here’s what to do about it
Investment strategy

Everything is collapsing at once – here’s what to do about it

Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect th…
23 May 2022
Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Three high-quality FTSE 100 shares going cheap
Share tips

Three high-quality FTSE 100 shares going cheap

As stockmarkets continue to fall, bargains are starting to appear, says Rupert Hargreaves. Here, he picks three high-quality FTSE 100 shares that are …
23 May 2022