Chinese stocks surged as investors reacted positively to massive government efforts to revive the country’s ailing economy. Haining Zha, Vice President and Director, Asset Allocation at TD Asset Management, speaks with MoneyTalk’s Kim Parlee about why these measures may be different than previous stimulus efforts and the potential market implications.
Transcript
Kim Parlee – Chinese stocks have been surging in recent days, including a session earlier this week that saw them posting their biggest single day gains in 16 years. Investors are reacting to government unveiling a series of bold stimulus measures to tackle several economic challenges, including an ailing labor market, a housing crisis, and weak consumer demand. My next guest describes these latest efforts as unprecedented. Haining Zha is Vice President and Director of Asset Allocation at TD Asset Management, and he joins me now. Thank you so much for coming in.
Haining Zha – Thanks for having me.
Kim Parlee – It’s been extraordinary, what has happened in the market. And I know another commentator I was listening to talked about the entire Chinese recession erased in five days in the market.
Haining Zha – That’s exactly what happened. It is highly unusual. But if you think about why they are doing now, they have every reason to do it. There are some weird things going on. So if you look at the, for example, M1, in the last 20, 25 years, it has never been negative. And earlier this year, we have negative print, which has never happened before. And another data point, if you look at mortgage, it never happened before that the household is actually paying back mortgage. The mortgage loan is actually decreasing and growing at a negative rate. So these are all some of the strange things that happen that put policymakers on high alert.
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