The price action showed once again how China’s efforts to boost its markets are struggling in the face of economic worries. Data Sunday showed industrial profits slid 6.7% in July from a year ago, adding to signs that the recovery lost further momentum. While calls for broad stimulus are mounting, authorities have held back given their determination to shift away from the debt-fueled growth model.
Echoing similar views, Neo Wang, Evercore ISI’s New York-based managing director for China Research, said that a turnaround in the A-share market would not happen unless Beijing adopts more “bazooka” measures, such as the 4-trillion yuan stimulus package it rolled out in 2008.Beijing’s efforts to revive investor confidence suggest the slump in Chinese equities has reached a level that policymakers can no longer turn a blind eye to.
The Hang Seng China Enterprises Index surged as much as 4.1% before ending the day 1.2% higher. While the gains helped pare its losses for August to under 10%, the gauge of Chinese shares listed in Hong Kong is still one of the world’s worst performers among more than 90 equity gauges tracked by Bloomberg. The CSI 300 is down 6.5% this month.
A gauge of onshore Chinese brokers soared 9.7% early on Monday following the stamp duty reduction, but ended the session just 2.2% higher.
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