News from China, bad or good, is not so interesting for investors as before. At least the influence of these news have become noticeably less in 2016.
Of course, on the first trading day in 2016 pessimistic Chinese economic data began the sale on world markets, but now less dynamics in the world depends on China.
For example, just yesterday came the disappointing data on activity in the industry of China, which fell to the lowest level since November 2011 it would Seem that this would lead to volatility of the stock market and sales.
But markets in the U.S. has grown since the attention of traders was focused on an entirely different place.
In addition, news from China about the reduction of reserve requirements had virtually no impact on the value of assets, though usually the easing of monetary policy in the major economies must be traded very actively.
So it turns out the us stock market is not dependent on China? Investors have become less worried about the slowdown in China?
The answer is not so simple. Professional traders and asset managers are always closely watching the state of the economy of the PRC, but in the short term the stabilization of currencies and better communication from the Central Bank let investors worry less about Chinese history.
A recent report from the people’s Bank of China eased concerns of further devaluation of the yuan, although Beijing continues to reduce currency exchange rate. Apparently, it will not make it aggressive, and U.S. Treasury Secretary Jack Lew acknowledged that the devaluation risk has decreased significantly.
The markets are now willing to believe the promises of the authorities, perhaps they just tired of the constant negativity.
In 2015 when falling Chinese stocks by 4% and the S&P500 was down 1% in the next session.
But this year, these fluctuations almost never occur. Chinese stocks still volatile, but the average decline in the US is only 0.6%.
Experts say that the markets become immune to the weak Chinese data, bad news considered good news for the stock.
In addition, the risk of policy tightening by the fed has declined, so the IBO makes every effort to prevent a more severe collapse of the market.
The question is how long it will last. A growing number of economists in Beijing said that the effectiveness of monetary policy will be questioned if economic data will not improve. As a result, the belief in the Central Bank of China could be completely lost.