Beijing, you have a problem…
Amid a ‘reopening‘ that is barely noticeable, an ongoing slump in real estate, a brewing (or boiling may be a better analogy) crisis in the shadow-banking system, record high youth unemployment (which is so bad, it’s hidden from the public’s view now), Chinese authorities cut interest rates and injected liquidity this week in hopes of raising sentiment (because the actual liquidity appears to merely be filling a leaking bucket given the lack of demand for credit last month).
The hopes of a sentiment shift did not work as Chinese stocks and the yuan continued lower.
So, Beijing reached down into its old bag of tricks and tapped stock market investors on the shoulder overnight.
Bloomberg reports that Chinese authorities asked some investment funds this week to avoid being net sellers of equities, as a rout in the nation’s financial markets deepened.