The second largest economy in the world is recovering rapidly from the Covid 19 pandemic.
As the world’s second-largest economy rapidly recovered from the coronavirus pandemic, China’s stock market has risen to its highest level since the 2008 financial crisis. The CSI 300 index, which tracks the value of the largest companies on the stock exchanges of Shanghai and Shenzhen, closed 1.9 percent on Tuesday at 5,368 points – its highest level since January 2008, only surpassing the 5,353 level it hit in 2015, when fears of a hard landing for the Chinese economy led to stock sales after years of record growth. The Chinese economy is recovering faster than expected, while other nations around the world are still coping with increasing infection rates and significant disruptions to business and social life caused by the pandemic. In 2020, for the first time in four decades, China’s GDP dropped. Many analysts, however, agree that tight controls to curb the spread of the disease helped prepare the ground for a quicker return to relative normalcy. Last year, China avoided the technical concept of a recession – two consecutive quarters of falling GDP – with a return to growth in the three months to June, when lockdown restrictions were rolled back. In 2021, China’s economy is projected to expand by more than 8 percent, significantly outpacing the recovery in many other countries, after growth of just 1.9 percent for all of 2020 – the lowest in 30 years. Nigel Green, CEO of deVere Group, an investment management company, said the rapid recovery reflects gains in the Chinese stock market. “China’s recovery is quite remarkable compared to other major economies, many of which are re-imposing tighter restrictions to stop the spread of covid amid a tsunami of new cases.” “China’s already impressive economic recovery is likely to gain momentum, and that will be extremely attractive.” “China’s recovery is likely to gain momentum,” he said.
On a day of choppy trading on the London Stock Exchange, the new milestone for China’s stock market came with the FTSE 100 closing 0.6 percent at 6,612 points, having previously recorded marginal losses on worries about the economic effects of the third ban on Covid in England. Which could drive the blue-chip index higher as more individuals get vaccinated. “The fast-paced nature of the vaccination process should ensure that any weakness caused by the closure is greeted by buying pressure as we look ahead to a March reopening.” said Joshua Mahony, senior market analyst at financial trading firm IG.