China Rolls Out Bold Stimulus Only to See Market Rally Fizzle
- Sentiment improves as Beijing takes action to support economy
- Traders doubt whether stock market gains will be sustainable
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It’s a familiar pattern that’s played out time and again during China’s stock market rout this year: Bold policy steps to rejuvenate the economy spark a flicker of enthusiasm at the start of the trading day but the recovery fails to last and concern swiftly returns with a focus on the troubled property sector.
Such was the price action that greeted the government’s latest push to boost growth, which involved a rare increase in the budget deficit ratio and President Xi Jinping’s unprecedented visit to the central bank. The rally lost steam less than an hour after the market opened and the main equity indexes ended Wednesday with only modest gains.