China Implements Multiple Measures to Revive the Market, but Stock Market Shows Weak Reboundš³
Over the weekend, China announced a slew of market supportive measures, including a cut in stamp duty on stock trades and curbs on major shareholder sales in hopes to revive one of the worst-performing equity market performances YTD. However, disappointments over a lack of more forceful measures on the economy, as well as substantial selling from foreigners compressed the CSI 300 rally from 5.5% at the open down to just 1.2%. Equity outflows were persistent throughout the day, and the ChiNext exchange saw the largest intraday drop (-5.6%) in over 2 years. The main CSI index has only seen such a large pullback on 3 prior occasions since 2004, two of which during the GFC and one during the popping of the A-share bubble. However, across all those occasions, the market has managed to pull off small rebounds on both a 5-day and 30-day basis, and hopefully we'll see a similar positive outcome out of yesterday's move in the weeks ahead.
