China, the Asian giant, which boasts of stealing the United States’ position as the world’s largest economy, has a stock market that has weakened with a poor start to 2022.
The Shanghai index registers a fall of 7.65% this year, standing at 3,361.44 points, while the South Korean Stock Exchange, Kospi, stands at 2,663.34 points with a decline of 10.56 as of February 1.
Only the Hang Seng index, of the Hong Kong Stock Exchange, registers a slight 1.73% increase in its price this 2022, however, with 23,802.26 points, it is 24% far from its maximum of 31,084.94 points registered on February 17 of 2021, before the complications he had for the real estate firm Evergrande.
The volatility of the global stock market, added to the panorama of recovery in Asia, and the outlook of investors in the face of government restrictions due to Covid-19, has dragged down Asian indices.
Amín Vera, deputy director of Economic Analysis at Black Wallstreet Capital, said that “in the case of Hong Kong and Shanghai, the Chinese government has focused on encouraging a local investment policy, expelling foreign investors from its market and has set guidelines so that Chinese companies that have ADRs abroad (United States) leave those markets, as happened to Didi, the home delivery firm”.
He added that “the People’s Bank of China, instead of increasing the reference interest rate, is lowering it, with the intention of injecting more capital, substituting foreign investment for government investment.”
China’s Gross Domestic Product (GDP) is about 81% that of the United States. If China grows at annual rates of 6.5% and the United States at rates of 2.5% from 2023, China’s GDP would exceed that of the United States by 2027.
The main index of the Tokyo Stock Exchange, the Nikkei 225, lost 5.95% in January, reaching 27,078.48 points.
Amin Vera explained that “Japan has very stable macroeconomic variables, with economic growth around 2%, a slight increase in population and controlled inflation. In addition, the profits are reinvested or distributed among the workers of the companies”.
The analyst added that “the Nikkei has a very defined range, due to the stability of its macroeconomic variables, with very cyclical movements.”
He said that “the casualties that it currently presents are due to political problems and, in addition, for the first time in a long time, it has a deficit primary balance.”
“However, the Japanese index will adjust its trend upwards at any time. In addition, the yen and the franc are the stability reference currencies for the market”, he stated.
In fact, the Japanese Parliament adopted on December 20 an additional budget to finance a massive stimulus plan to prop up the economy in the face of Covid-19.
This item, which amounts to 317,000 million dollars, is equivalent to the GDP of countries such as Colombia, Vietnam or Finland.
This week China’s bourses will remain closed until February 4 for the Lunar New Year holidays.