Chinas regulators face a losing battle convincing global funds to invest in the nations stocks unless market boosting efforts are accompanied by stronger stimulus to support growth. Officials have undertaken a flurry of measures in recent days to improve battered sentiment in the worlds second-largest stock market. Theyve urged financial institutions to snap up equities, encouraged companies to boost buybacks, and asked mutual funds to stop selling. All to little avail, with the MSCI China Index slumping a further 1.3% at the close of local markets on Friday.
Modest interest rate cuts and vague promises of support for debt-mired property developers have failed to restore sentiment, and fund managers are turning adamant that they need to see more government money flowing before they consider returning.
In difficult economic times, Chinese people have become increasingly reluctant to tap into their savings, but healthcare costs are on the rise as the population gets older and people invest more in their well-being.
Excessive levels of indebtedness and slow income growth among Chinese residents are constraining consumption, but for now China’s Politburo is relying more on domestic demand to fuel national growth.