Stalled trade growth in China has wreaked havoc on the Asian stock market as global demand falters.
Chinese imports fell by half this past June to 6.3%, while exports increased 11.3% in comparison to May’s 15.3% growth. Meanwhile, slow demand for China’s oil, iron ore and various other goods has triggered concern in other economies across the globe- Chinese growth was projected to aid demand for foreign exports.
Last week, China was forced to cut lending rates for the second time in less than a month. Experts claim they may be too late with their reactions, however.
Sean Darby of Jefferies explained:
“Expectations have been high for a quick turnaround in economic growth but the reality has been a deliberate, ponderous easing that has failed to pre-empt the weaker economic data. Although valuations are appealing, a modest bearish position seems warranted until interest rates move to their cycle lows.”
However, other analysts have a more upbeat outlook, claiming that the United States and Europe will undoubtedly turn to strong monetary stimulus measures if the situation continues to worsen.
“It’s wrong to be too bearish,” said Garry Evans of HSBC. “Central banks offer likely support for equity markets. With valuations this low, indexes can rise in line with earnings growth.”
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