The Drip, Drip of Easing Tortures China Stock Bulls

In water torture, liquid is dripped slowly on to the head of an immobilized victim. Investors waiting for a predicted rally in the nation’s stocks may know the feeling. The anticipated policy easing that was largely the basis for a resurgence of optimism late last year is indeed arriving — but in an erratic trickle that seems never quite enough to lift Chinese equities into a sustained upturn.

So far in 2022, China has cut interest rates for the first time in two years, reported record lending for January, prodded banks several times to increase credit, used state-owned funds to support the stock market and, on Tuesday, pumped cash into the system via the central bank’s medium-term lending facility. After all that, the benchmark CSI 300 Index is down 6.5% and the Shanghai Composite has lost 4.8% for the year as of Wednesday’s close (Chinese stocks traded in Hong Kong have done better, with the Hang Seng China Enterprises Index rising 5.4%).