China’s stock market revival is helping economic recovery, says China Sec Journal By Reuters

SHANGHAI (Reuters) – China’s stock market revival and rising investor confidence will help the country’s economic recovery by breaking a vicious cycle that has reduced investment and consumption, the official China Securities Journal said in an editorial on Monday.

Chinese stocks posted their best week since 2008 last week after Beijing unveiled a slew of stimulus measures, including interest rate cuts and a $114 billion war chest to boost the stock market.

“The capital market is not only a ‘barometer’ of the macro economy, but also a ‘thermometer’ of investor sentiment,” the editorial said.

“The revitalization of the market is a key finding for boosting confidence … and improving economic expectations.”

Chinese stocks have underperformed global markets for years, dragged down by an economy plagued by a housing crisis, weak consumption and geopolitical tensions.

“Investors worried about domestic and external risks, leading to a slowdown in the stock market, which in turn undermined investor confidence in a downward spiral,” said the China Securities Journal.

Low risk appetite has also made it difficult for private equity investors to exit, hurting the economy, so rejuvenating the capital market is helping to break the vicious cycle, the article said.

The paper said more upcoming policy announcements will further bolster confidence, helping to repair household balance sheets and revive the economy.

(1 USD = 7.0110 Yuan)