Major Chinese stocks got a boost on Monday after the country’s finance ministry reduced the 0.1% duty on trading stocks “in order to invigorate the capital market and boost investor confidence.” Shares of Alibaba (BABA), JD.com (JD), and Baidu (BIDU) were on an upswing in pre-market trading on Monday. Meanwhile, Chinese EV major XPeng (XPEV) jumped in trading as it moved to acquire the smart car driving unit of DiDi Global (DIDIY) in a $744 million equity deal.
According to a Reuters report, the China Securities Regulatory Commission (CSRC) plans to roll out more measures to increase market confidence. This includes slowing the number of initial public offerings (IPOs) and regulation of major shareholders’ share reductions. In addition, the CSRC has also announced the lowering of margin financing requirements by Chinese stock exchanges.
China’s economic recovery has been lagging since the pandemic while its property market is facing a deepening debt crisis. The Chinese Government has taken a number of steps to shore up its economic recovery even as it has slashed its key benchmark interest rate less than expected.
However, the economic slowdown in the world’s second-biggest economy continues to persist. According to the latest industrial data, profits at China’s industrial firms fell year-over-year to 6.7% in July – its seventh straight month of a drop as sluggish demand squeezes companies.
The slowdown in the Chinese economy has resulted in the iShares China Large-Cap ETF (FXI) down by more than 8% year-to-date.
