China’s stock market had its best rally in two months, while US stocks continued to fall. The jump came after Chinese officials announced a press conference on Monday to discuss new plans to boost consumer spending. Investors have been waiting for such steps since the property crisis weakened the economy. However, the challenge for Beijing is to spend enough money to make a real impact.
At the same time, bond investors are starting to change their outlook on China’s economy. Many had expected China to struggle with long-term deflation and low-interest rates, similar to Japan. But now, they are beginning to rethink that view. If Monday’s GDP data shows stable growth in the first two months of the year, confidence in China’s economy could strengthen even more, despite ongoing trade tensions with the US under President Donald Trump.
Foreign investors have also been making big moves in emerging markets. In February, they added a net $15.9 billion, according to the Institute of International Finance (IIF). China’s stock market saw $11.2 billion in foreign investments, the highest since September. However, investors pulled $15.1 billion from China’s debt market. Meanwhile, outside China, emerging market stocks lost $13.3 billion, but their debt markets attracted a massive $33.2 billion.
