China’s efforts to kick-start a property sector revival are poised to have a substantial, positive impact on stock markets and delight global investors, said Nigel Green, founder of a leading independent financial advisory and fintech advisory.
“I believe it’s China, not the US, that can really kick-start the global economy. Stock markets are set to get a boost amid the rollout of steps being taken by PBOC to revive the country’s beleaguered property sector. “
China’s property market has faced a crisis marked by plummeting property prices, oversupply, and a debt-laden real estate sector. This turmoil raised concerns for China’s domestic economy and global investors with exposure to Chinese assets.
The People’s Bank of China (PBOC) eased borrowing rules and slashed the reserve requirement ratio for foreign exchange deposits from 6% to 4%.
It is expected that the central bank’s decision to ease borrowing rules and cut reserve requirements for foreign exchange deposits, plus the cutting of interest rates on deposits, will have a considerable positive impact on global markets as investors digest the news that Beijing is being proactive on this critical economic issue.
Hong Kong’s Hang Seng Index gained 2.5% at the news, while China’s stock exchange rose 1.33%. Asia markets also responded with a 0.7% climb for Japan’s Nikkei, a 0.56% rise for Australia’s ASX/S&P 200 and South Korea’s Kospi up by 0.81%.
As China’s property sector stabilises, it is expected to boost construction activities, create jobs, and stimulate industries such as cement, steel and furniture. This economic growth should have a positive spillover effect on countries that use China as a major trading partner. This should, in turn, filter into the global economy.