China QE = inflation⬆ + markets⬆ = 💹🎊

International investors seemed to have regained their confidence in Chinese markets as they have boomed in the past few days. In just 2 days, the markets rallied to grow a staggering 7%. Many global investors are behind this rally as they expect the Chinese markets to have a dream run for the next 6 months. The Xi Xinping-led government is taking some steps, including quantitative easing (QE) to bolster its markets and economy. These steps are going to have ripple effects across the world markets in the form of a bullish run. Now is the best time to take advantage.

What did the Chinese Government do?
The Chinese economy has been experiencing a slowdown for quite some time now. Owing to this, a lot of foreign investment had left the shores, further pushing down the numbers in the stock markets. Taking note of this, the Chinese government has released a few stimulus packages ending the sluggish performance. Many have even claimed the current stimulus is the ‘boldest’ stimulus yet. There are going to be widespread reforms that are already catching the attention of foreign investors who are reading to pour back investments into the Chinese market.

This is the exact scenario of the 2008 financial crisis. The US markets were scraping the bottom and to bolster them, many stimulus packages were released and more money was printed. China is doing the same to uplift its economy and they will also be printing more money. This money will then go towards securing limited goods, and this will cause a domino effect across the world resulting in price rise. However, there is another side to inflation that investors can take advantage of – stock market growth.

What is expected to happen?
The Chinese government releasing stimulus packages and printing money will create a huge boom in the next 6 months. The Chinese economy will take off like a rocket and early investors will stand to gain the most from this. Now, you might think China is just going to pump money into failing industries but no. A huge chunk of this stimulus is going straight into the hands and bank accounts of struggling people. Citizens who are struggling or unemployed will receive a one-time cash handout that they can use to buy essentials.

The country’s central bank, the People’s Bank of China, has also announced rate cuts on existing and future mortgages. This will put more money in people’s pockets to spend. This will increase domestic consumption boosting the economy. Seeing these positive moves, foreign investments are also coming back.

Money with Mansy has been closely monitoring the situation for a long time and has also advised many of our clients to invest in the Hang Seng to counter the volatility of the Indian stock market. The Indian markets recently crashed 2%, and those not invested in Hang Seng lost value in their investments. Therefore, for more such fact and analysis-based sound investment advice, get in touch with Money with Mansy today!