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China loses spot as world’s No.2 stock market: Bloomberg
SHANGHAI, Aug 3, 2018 (BSS/AFP) – China’s stock market has been overtaken
as the world’s second-biggest by Japan’s, having been swiped this year by the
threat of a trade war with the United States and slowing economic growth.
Data from Bloomberg News showed the value of equities on the mainland had
slipped behind those in their neighbouring country Thursday for the first
time since taking the number-two spot in 2014.
The figures showed Chinese stocks were worth $6.09 trillion, compared with
$6.17 trillion in Japan. The US market is worth $31 trillion.
While global markets have been broadly hit by fears of a trade war between
the world’s top two economies, Chinese equities are among the worst
performers this year, with the benchmark Shanghai Composite Index slumping
more than 16 percent since the start of January.
The pressure was ratcheted up this week when the White House said it was
considering more than doubling threatened tariffs on a range of Chinese
imports worth $200 billion.
Washington has already imposed tariffs on $34 billion worth of goods and is
considering hitting another $16 billion in the coming weeks.
“Losing the ranking to Japan is the damage caused by the trade war,” Banny
Lam, head of research at CEB International Investment in Hong Kong, told
Bloomberg News.
“The Japan equity gauge is relatively more stable around the current level
but China’s market cap has slumped from its peak this year.”
Adding to the selling has been a string of data indicating economic growth
is slowing, while Beijing has embarked on a drive to cut a worryingly large
debt mountain as well as reduce pollution.
Also worrying investors are the yuan’s recent losses, with the currency at
its lowest level against the dollar for more than a year, while traders have
been mostly unmoved by government measures and promises to support the
economy.
At the same time, Japanese corporate results have been broadly upbeat,
providing some support to markets there, though the Nikkei is still slightly
down this year.
“Investors are paying attention to government policies as the US-China
trade war will remain uncertain for now,” Yoshihiro Okumura, general manager
at Chibagin Asset Management, told AFP in Tokyo.
“On the other hand, Japanese companies are showing strong results in
general, sustaining share prices on the Tokyo Stock Exchange.”
However, he added: “The Tokyo market is not in top form. The country is
also subject to the trade war as it is heavily relying on global trade.”
Chinese stocks have been on a rollercoaster since taking the second spot in
2014.
Fuelled by risky investing by individual investors looking for a quick
profit, the market surged through early 2015 to hit a high of $10 trillion,
but then the bubble burst and it went into a downward spiral, with the
Shanghai composite crashing about 40 percent.
BSS/AFP/HR/1450