Domestic demand conditions are extremely subdued. And when you couple that with low inflationary pressures and the collapse of the property sector in recent years, it's tough to build things back up from the ground. That is not to mention the more challenging outlook globally with Europe supposedly wanting to diversify from China and the ongoing trade war with the US. The latter is set to intensify further once Trump takes office next year.
The surging rally has come to a halt and there has been some consolidation only afterwards. A sign of caution perhaps? Or are investors biding their time for the next big announcement to dive back in again?
I want to say there's a lot of investor "angst" towards China but not in the traditional sense. It's more of a case that investors tend to regard China as a strong growth hub and recent years have made valuations there very, very cheap. So, it's a case of them wanting China to bounce back and to get in on the action.
That could lead to a couple of modest bounces for Chinese stocks as we look towards next year, similar to the spike seen above.
And with the demographic challenge that China is facing over the next few decades, it's going to be a major issue if they can't steer the ship in the right direction from the onset. Japan 2.0 may be the future that they are looking at.
This article was written by Justin Low at www.forexlive.com. Read More Details
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