$7T of Stock Market Cap Have Gone Up in Smoke in 2 Years in China – Xi Jinping Is Now Expected To Come to the Rescue!

Will Xi Jinping be able to revive China's economic and stock market machine?

A fortnight ago, I told you that China's stock market was in the midst of a huge crisis. The figure was frightening, with $6,000 billion in capitalization gone up in smoke over the last two years.

A fortnight later, the situation is even worse. I told you so, but I didn't think it would happen so quickly.

We're now talking about $7,000 billion in capitalization gone up in smoke in 2 years!

This is a matter of urgency for Xi Jinping's China.

China is facing an economic slowdown which is causing this stock market debacle. Where things become problematic is that this stock market debacle is in turn weighing on the economic recovery.

China is in the middle of a vicious circle.

The situation in China is so serious that Xi Jinping himself is due to meet the Chinese stock market regulator before probably speaking on the financial markets.

Explanations of an explosive situation.

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In 2023, stock market indices rebounded around the world. Everywhere, that is, except in rare countries like China. The Chinese stock market lost 3.70% in 2023. In January 2024 alone, the fall worsened, approaching 10%.

What do Chinese investors expect from Xi Jinping?

The Chinese are waiting for announcements on stimulus packages. What's more, Chinese investors are now waiting for measures to rescue the Chinese stock market.

Even if Xi Jinping makes a spectacular announcement in the next few hours, the problem of the Chinese economy will remain for the time being.

What's preventing the Chinese economy from taking off again?

The Chinese economy is weighed down by the massive over-indebtedness of all economic players, by the real estate crisis (Evergrande is only the tree that hides the forest), by the caution of Chinese households, and by the fall in public investment.

And yet, there is still no stimulus plan on the horizon in China.

It is this economic situation that has weighed heavily on the stock market.

The fall in the stock market weighs on the Chinese banking and financial system, on companies, and on individual shareholders, which in turn accentuates the economic slowdown. To break this vicious circle, the Chinese government will have to act.

And that's exactly what everyone in China expects Xi Jinping to do.

As I mentioned earlier, over $7,000 billion in market capitalization has vanished from the Chinese and Hong Kong stock markets since the record high in 2021.

Emergency meetings are being held at all government agencies and stock exchanges to find a solution.

Recently, short-selling restrictions and the creation of a stock market stabilization fund have been mooted, but the big question is whether this will be enough to reassure investors.

We'll have the answer in a few hours, after any announcements from Xi Jinping, who for the moment seems to be overtaken by events.

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