Pig in a poke

2 January 2019 By Christopher Beddor

Shanghai’s bourse lost a quarter of its value last year, despite official pep talks. Now it looks a bargain, compared to past levels and other exchanges. But investors won’t be going hog wild: the economic outlook for the Year of the Pig is the most uncertain in over a decade.

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The benchmark Shanghai Composite Index fell nearly 25 percent over the last 12 months, making China the world’s worst-performing major equity market in 2018.

Chinese policymakers closed the year by reiterating promises of fiscal stimulus and infrastructure spending, to support a slowing economy. Xinhua quoted Finance Minister Liu Kun on Dec. 29 as saying China would implement “inclusive and structural” tax cuts in 2019, targeted at supporting the manufacturing sector and smaller businesses.

China’s central bank has also hinted at the possibility of further monetary easing in 2019, dropping some references to a “neutral” stance. Sun Guofeng, head of the People’s Bank of China’s monetary policy department, said on Dec. 28 that the policy stance had not shifted, but a greater focus was now placed on being “more forward-looking, flexible and targeted in response to changes”.

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