The News
After key Chinese stock indexes saw some of their biggest weekly gains in years last week, investors are increasingly confident that the country’s flagging economy may be heading toward a lasting recovery.
“FOMO is running high” one analyst told Bloomberg. “Based on historical valuation, we think Chinese stocks have another 20% runway to go.” Meanwhile, a Goldman Sachs analyst predicted the rally may continue through the end of the year. When asked what investors might buy, a hedge fund manager told CNBC: “Everything. Every. Thing.”
Markets have been buoyed by Beijing’s release of a multi-point stimulus package, which included billions in spending and easing measures, although much of the package’s scope remains unclear. From what has been announced so far, the package will likely fall short of the country’s 2008 stimulus, which saw 4 trillion yuan injected into the economy, and some suspect the new measures may be insufficient to fuel a broader Chinese economic rebound.
Know More
The stimulus remains a major change of course, analysts noted, particularly as China’s President Xi Jinping has previously disdained consumer handouts, which he thinks breed laziness, The Economist noted. Now, saving the economy and rescuing markets is becoming “politically correct,” one Chinese bank analyst said.