Chinese Stock Markets Trade High Despite Risks

Despite risks stemming from China has been increasing, the country’s stock market trading sees record levels. China’s Covid-zero policy is one such risk. The country has been hard on any outbreak of the virus, and one of the last places that still has movement restrictions.

China’s Covid strategy has also affected supply chains negatively, but investors seem to believe that supply chain problems will be short lived. The strategy’s impact on global economy is still unknown; but it’s been affecting Chinese assets already.

If China maintains its Covid-zero strategy, it is probable that global trade will  be weakened. Some company results have already shown China’s stance may have negative impacts. Both Starbucks and McDonald’s reported drops in their earnings.

The MSCI AC World Index trades at a near record high and is up 16% this year, but the MSCI China Index is down 14%, particularly because of government crackdown on various industries.

According to government data released this month, China’s growth rate has slowed in the third quarter to 4.9% compared to the 7.9% in the second quarter.

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