Doubts about the Chinese economy are reflected in the stock markets. The main Asian indices closed this Friday with falls that came to exceed 2% in the case of Hong Kong’s Hang Seng. In the week almost 6% has been left, the worst in five months. Shenzhen’s CSI 300 index also lost more than 1%, similar to its weekly decline. The tonic has moved to the rest of the continent and to Europe.
Investors doubt the strength of the Asian giant’s economy. Despite the growth data that is released quarter after quarter, the July activity figures released this week are worrying, especially for the real estate sector, stagnant consumption and rising unemployment, Barclays analysts said in a note. The liquidity shortage, while the Central Bank lowers rates to stimulate activity, also seems to extend to the vast shadow banking sector. All this is sowing doubts about the country’s economy. And when China suffers, the rest of the planet notices.
“At the start of the year, the Chinese economy was going from strength to strength. But the picture has gradually worsened since then and now looks pretty bleak,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.
Technology shares fell 3.6% on the possibility that Washington imposes measures on the manufacture of electric batteries to end US links to forced labor in Chinese supply chains.
The real estate sector also fell 2%. An example of the problems on this front is that Evergrande has filed for bankruptcy in the US to protect itself from its American creditors. In this way, it protects the company’s assets in the US while managing restructuring agreements in other jurisdictions. The Country Garden crisis, another real estate colossus, is also worrying about the ramifications of its crisis, approaching default, with an impact on financial institutions.
The trend in China has infected stock markets in the rest of the continent. In Tokyo the falls were more moderate, around half a point. The European markets were not spared either, with declines close to the mid-session point, including the Ibex 35 (-0.4%).
