The stock market rallies on Wall Street and elsewhere look like bubbles and are likely to eventually recover, China’s biggest banking regulator warned on Tuesday.
“Financial markets are trading at high levels in Europe, the US and other developed countries, which are in conflict with the real economy,” Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC), said in a statement. said a news conference. , according to Reuters, Bloomberg and other media.
Guo said asset gains over the past year were a direct result of measures taken by central banks and governments to ease the economic tensions of the COVID-19 pandemic. He warned that corrections could come “sooner or later”.
Amid concerns that foreign capital could flow to China too quickly and cause instability, Guo said his agency was looking at ways to control the inflow. He also warned about ‘dangerous’ speculation of property in China.
His comments are attributed to the fact that he blew the wind out of the Asian markets on Tuesday. This follows the best day in nine months for the S&P 500 SPX,
as investors raised economic data. Hang Seng HSI in Hong Kong,
slipped 1% and China’s CSI 300 index 000300,
it decreased by 1.2%. US futures contracts ES00,
NQ00,
also showed lower.
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Market response indicates “how sensitive markets are to the removal of policy accommodation. It also emphasizes that central banks will move away at different speeds to recover from last year’s crisis, ‘said Stephen Innes, Axi’s chief global strategist, in a note.
But Jeffrey Halley, senior market analyst at OANDA, noted that Guo’s comments came on a ‘slow news day’ and made a bigger splash than they normally would. “Mr Guo’s statements contain more than a hint of politics,” he added.
‘Before the tantrum of the bonds last week, no one was talking about bubbles at all. “One week of two-way pricing actions in markets and everyone panicking about bubbles, the schizophrenic nature of financial markets these days is low-paying,” the analyst said in an email.
It is fortunate not to pick the pinnacle of the stock market, and not the science and conditions that drove the underlying rally, remain just as strong as ever, despite the fact that the markets are chasing short-lived noises. We may be heading all the way to a lower correction in stock markets, but that’s all it will be, a correction, ‘he added.