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China’s stimulus draws investor skepticism despite market ebullience

Oct 7, 2024, 10:33am EDT
East Asia
Workers cleaning the window of a tall building in a Beijing commercial district are seen behind China’s national flag.
Kim Kyung Hoon/Reuters
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China’s recently announced stimulus program — which drove a stock market surge — is drawing skepticism from investors and causing Beijing problems with currency management.

Traders are gearing up for what many expect to be a frantic reopening of markets Tuesday: Many brokerages expect a surge in new accounts, and both the Shanghai and Shenzhen stock exchanges are running tests to ensure everything runs smoothly, Bloomberg reported.

Meanwhile, major global money managers such as JPMorgan Asset Management, HSBC, and Nomura are seemingly waiting for China to back up last month’s promises of opening the fiscal spigot, with a top Invesco official arguing “some stocks have become really overvalued.”

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The stimulus pledge combined with the US Federal Reserve cutting interest rates has also driven China’s renminbi higher, potentially hurting exporters whose goods will thus become costlier on global markets, a currencies analyst told the Financial Times.

A chart showing a surge in Shanghai’s stock exchange following the announcement of a stimulus package
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