Why investors think China's recent rebound is short-lived
It's the same old ‘Chinese medicine’ , they say.
According to BNP Paribas, while investor opinion seems divided on China, most still feel the recent bounce in
Chinese equities, driven by the government’s growth-supporting measures, is temporary.
Most investors feel the recent measures, though subtly different from the ones adopted earlier, are essentially the same old ‘Chinese medicine’ (pump priming through investment). Investors are looking at the November Party Congress for guidance about growth and liquidity in 2014.
Most believe the government is likely to scale down its growth target, but that this won’t be a shock to the market. Most investors don’t expect announcements on structural reforms in November, and are treating the recent rally in Chinese stocks as a short-term bounce.
Usually such bounces last till the Chinese new year, though some investors seem willing to take profit well ahead of that deadline.