The ongoing tensions between China and the United States, coupled with the economic weakening of the Asian country, have caused a negative reaction in the Chinese stock markets. What to expect now?
China continues to arouse concern from analysts, both due to the current economic challenges and the complex geopolitical dynamics with the United States. An aspect of considerable importance but perhaps still little discussed is the limitation that the President of the United States, Joe Biden, and Vice President Kamala Harris would have introduced on American investments in sectors such as semiconductors and artificial intelligence (AI) in China, justified by national security concerns. This situation represents a major event for China, adding further complications to an already previously tense relationship between China and the United States, especially in the tech sector.
The financial markets, with particular reference to the exchanges that reflect the Chinese capital market, recorded a decrease, albeit not excessive, with contractions in line with normal fluctuations. However, it is important to note that the impact of this decision could potentially trigger significant complexities.
What does the US measure consist of?
The Executive Order issued by the President of the United States introduced restrictions on US investment in certain Chinese companies, with the stated aim of limiting the development of technologies with possible military and surveillance uses in East Asia, which could have implications for "national security". These restrictions apply to investments in semiconductor, quantum computing, and artificial intelligence companies. At the same time, the lackluster economic outlook is instilling concern among the country’s investors. Economic data points to a decline in both consumer prices and manufacturing in China. More and more discussions are emerging regarding a possible new deflation cycle, which could, in part, also affect other countries, especially the West, given the trade relations with China.
What is happening to the stock market in China?
On Wednesday, there was a general decline in shares in the Chinese market, possibly due to the recent lackluster news. Despite this, the losses recorded in stock market indices have not reached levels such as to arouse excessive concern among stock market operators. In detail, the CSI300 index fell by 0.73%, while the Shanghai Composite Index fell by 0.82%. Hong Kong was affected the most, with the Hang Seng index dropping by 1.38%.
The restrictions involving Chinese sectors did not generate substantial reductions in share prices. On the other hand, the Hang Seng Mainland Properties Index fell by 5.99% this week, reflecting both economic concerns and the continued weak property market in the country.
Original article published on Money.it Italy 2023-08-12 15:52:00. Original title: Azioni Cina: quali previsioni dopo il limite agli investimenti imposto da Biden?
