China’s crashing stock market could be the breaking point for foreign investors, said Jeremy Mark of the Atlantic Council.
The market will become more volatile as the remaining investors focus on quick profits.
The country must respond to the real estate crisis to initiate a stable market recovery.
The decline of the Chinese stock market may have scarred this market for the long term, as foreign investors are unlikely to return. Atlantic Council wrote Friday.
On domestic and U.S. indexes, Chinese companies have taken a combined $7 trillion hit since the start of 2021. The fallout could be the final breaking point for offshore traders, who are already rushing to exit amid the deteriorating outlook for the country’s economy, Senior Fellow Jeremy Mark said. .
With little incentive to get back into action, China will become the focus of investors betting on quick profits rather than stable growth.
“Investing in China is likely to become the domain of foreign bargain hunters and hedge funds, some of whom are already actively trading the market,” Mark wrote, later adding: “The fund managers left behind could end up contributing to the volatile swings in the market. fortunes that shape daily life in Chinese markets.”
Beijing has responded to the financial tensions in recent weeks with a raft of measures aimed at tempering the sharp decline. These include state-backed purchases, as well as restricted purchases access to offshore markets and curbs short-selling.
Although this wave of efforts has led to a rally this week Chinese indexesA stronger recovery will depend on Beijing’s handling of broader crises, Mark…