China has had rampant issues with its economy, since the large toll covid had in early 2020, and it is still teetering heavily as of now. China's newest ploy to fix its economic situation is to limit big investors' abilities to lend different stocks for short-selling. Which has been adding to its ever-increasing issues with its stock stock market.
This measure will ban strategic investors from lending out shares during times been it was agreed to avoid doing so. With this, they hope to promote fairness. Curb advantages in the market, and allow market information time to travel fairly.
This has lifted Chinese stocks from a five-year low, and they're attempting to do more. But according to experts the move won't be enough to bring investors back to the country's financial markets. Other factors helped with their current economic situation including a distressed real estate market, mounting debt, unprecedented youth unemployment, and the flight of foreign capital.
https://markets.businessinsider.com/news/stocks/china-stock-market-economic-outlook-short-selling-economy-2024-1
3 comments:
Always interesting reading about China's economy. In general, they're so rural that they really can't touch us despite everyone always claiming that "China's gonna pass us soon." I think that it's smart to promote fairness in the stock market and it's clear that helped them. I really wonder how they'll attack such low youth unemployment and the flight of foreign capital.
Considering the broader context of global economic conditions, how might China's efforts to tighten regulations on short selling align with or differ from strategies employed by other countries facing economic uncertainties?
This seems like China's tightening on speculative capital is a direct response to waning investor confidence due to the falling of China's historically strong real estate market. Another blog on the page covered the bankruptcy of one of China's largest real estate investment firms. Since China's real estate market has been struggling for a while now, I assume tightening of short-term capital is a tool China has used multiple times. As failures in the real estate market continue to occur, I wonder how the flow of capital in China will be affected.
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