Stock market rallies on Wall Street and elsewhere look like bubbles and will eventually be corrected, the Chinese banking regulator warned on Tuesday.
“Financial markets are trading at high levels in Europe, the US and other developed countries, which runs counter to the real economy,” Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC), told a news conference. , according to Reuters, Bloomberg and other media.
Guo said the gains in assets were a direct result of measures by central banks and governments over the past year to ease the economic strain of the COVID-19 pandemic. He warned that corrections could come “sooner or later.”
Amid concerns that foreign capital could flow too fast into China and create instability, Guo said his agency is looking for ways to control these inflows. As he warned about “dangerous” speculation on Chinese property.
His comments were credited with taking out Asian markets on Tuesday. This is the best day in nine months for the S&P 500 SPX,
while investors cheered up optimistic economic data. Hang Seng HSI in Hong Kong,
fell by 1% and China’s CIS 300 index 000300,
decreased by 1.2%. US ES00 futures,
NQ00,
also indicated below.
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The market reaction indicates “how sensitive markets are to eliminating policy adaptation. It also emphasizes that central banks will run at different speeds to move away from last year’s crisis, “Stephen Innes, Axi’s chief global market strategist, told clients in a note.
But Jeffrey Halley, a senior market analyst at OANDA, noted that Guo’s comments came on a “slow news day” and made a bigger splash than he normally would have. “Mr Guo’s statements have more than a hint of politics in them,” he added.
“Before the receipt caused anger last week, no one was talking about bubbles at all. A week of two-way price action in the markets and everyone is panicking with bubbles, so is the schizophrenic nature of the low attention of the financial markets these days “, said the analyst in comments by e-mail.
The choice of “the top of the stock market is luck, not the science and conditions that fueled the core rally remain as strong as ever, despite the fact that markets are chasing their tail in noise in the short term. We could move towards a smaller correction on the stock markets, but that is all it will be, a correction “, he added.