Sunday, February 10, 2013
Stock Market: Shanghai - Happy New Year!
I reckon that the reptile will bring good luck. The new year should be bright for China, the stock market in Shanghai and the whole world. The Chinese economy - which has been slowing for years - had found it´s bottom in last autumn - with a growth rate of just north of 7%. In the 4th quarter 2012 the Far Eastern economy accelerated again and the stock market in Shanghai has started a new rally in December. Since then the Chinese stock market gained around 20%.
I believe that China´s stock market rally and swift economic growth will continue in the year of the snake; powered by the secular catching-up process which is fueled by the still high income difference to the US and other Western nations. The new formed Chinese government, which got restructured in late 2013, already started reforms to encourage economic growth and stimulate consumer spending. Beijing also implemented a huge infrastructure program, including ample investments in railway systems and highways, to support the economic growth. And the Chinese monetary policy got more accommodative because the risks of inflation are constrained - at least for now.
A stronger Chinese growth should rekindle the still sluggish global economy because the Far Eastern country is becoming more and more important. Bloomberg reports that China already "eclipses U.S. as biggest trading nation measured in goods" (bloomberg), meaning that "China surpassed the U.S. to become the world’s biggest trading nation last year as measured by the sum of exports and imports of goods".
The swift rising Chinese imports fueled by the growing consumer demand translate into rising exports for Volkswagen, Nike, Apple and other companies in the West. Maybe the stock market in Shanghai could lead the global stock markets to new heights.