Dwindling stimulus hopes following solid data and rising Middle East turmoil dampen markets.
China’s CSI300 Index fell 0.7% to its lowest since February 2019, with the Shanghai Composite Index dropping 0.9% to its 2022 low.
SHANGHAI: China’s blue chip index dropped to its lowest in over 4-1/2 years on Monday, with markets subdued due to the ongoing property crisis and lower chances of stimulus after a set of strong economic data, exacerbated by the Middle East conflict. China’s blue-chip CSI300 Index hit its lowest level since February 2019 and was down 0.7% by 0258 GMT, while the Shanghai Composite Index fell 0.9%, touching its lowest level since late 2022.Multiple factors were in play including headlines around the export ban by the US, the widening Middle East conflict, and China’s strong third-quarter economic data print likely being interpreted as leading to a lower likelihood of stimulus in the fourth quarter, UBS analysts wrote in a note.
While regulators have introduced several policy tweaks to bolster market sentiment, Thomas Gatley, China strategist at Gavekal Research, argued that onshore markets face two problems that defy quick solutions: high global yields and the ongoing property crisis.The US enjoys the biggest yield advantage against China in 21 years, with the yield gap between China’s 10-year government bonds and their US counterparts at 226 basis points.
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