By Samir El Khoury
Two days ago, the People’s Bank of China left the one-year loan interest rate unchanged at 2.5%, contrary to analysts’ expectations.
The People’s Bank of China has injected about 995 billion Chinese yuan through medium-term loans to boost liquidity and help meet the demand for financing.
Economic indicators today in China – the second largest economy in the world – showed a clear discrepancy. Although the GDP index recorded a growth of 5.2% in the fourth quarter of last year, this percentage remains lower than expectations (5.3%).
In addition, retail sales fell on an annual basis, recording 7.4%, which is lower than expectations (8.0%) and the previous reading (10.1%), and the unemployment rate rose from 5.0% to 5.1%.
As for the figures for the investment in fixed assets and industrial production indices, they exceeded expectations and the previous reading.
The markets are still awaiting more stimulus measures by the Chinese authorities to support the Chinese economy, which is still suffering from weakness, especially since the consumer and producer price indices are still in the contraction category.
This weakness in the Chinese economy comes as a result of many factors, most notably:
• The ongoing crisis in the real estate sector, which represents approximately 30% of China’s GDP, which in turn is burdening the Chinese economy.
• Declining consumer confidence
• Foreign investors continue to sell Chinese stocks
As for the Nasdaq Golden Dragon China Index, which measures the performance of Chinese companies listed in the United States of America, it closed yesterday at 5,733 points, its lowest level since November 28, 2022.
Technically, it seems that the downward trend is prevailing at this stage, as it has declined by about 27% since the last peak recorded on July 31, 2023 (7882 points) until yesterday’s close (5733 points).
As for the Relative Strength Index, it records approximately 31 points below the 50-point barrier and is approaching the oversold area, which indicates negative momentum for the Nasdaq Golden Dragon China Index.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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