The Chinese Market Mystery
SHANGHAI/NEW YORK – China’s economy is showing strong signs of recovery, with fourth-quarter data indicating a rebound across all sectors. But, while the country’s burgeoning recovery recently lifted consumer sentiment to a five-month high, the country’s stock-market performance has remained weak.
Indeed, in late November – after a year of accommodative measures and mini-stimulus policies – the Shanghai Stock Exchange (SSE) Composite Index closed below 2,000, for the first time since January 2009. Less than a month later, Chinese shares rose by 4.3%, bolstered by the index’s largest single-day gain since October 2009, a reflection of rising confidence inspired by strong manufacturing data. But, when the World Bank raised its forecast for Chinese economic growth in 2013 to 8.4%, the index closed flat, at 2,162.
The SSE ended 2012 with a 3.17% up-tick, and it is currently close to 2,280. But, if China’s economy is rebounding, why is its equities market responding slowly – and at times negatively – to strong signs of recovery?