(Bloomberg) -- China’s sway over the global market is in noticeable decline.
This week’s promise of bold economic support from the Chinese Politburo may have given local stocks a boost, but it barely registered elsewhere. The MSCI Asia Pacific regional benchmark was little changed in the first trading session after the announcement and stocks fell in Australia, which counts China as a key trading partner. The S&P 500 Index had its worst session in nearly a month.
Base metal rallies were muted, and oil fell, indicating investors aren’t hopeful of a turnaround in one of the world’s biggest importers.
The landscape has changed since 2015, when global equities, oil and metals rose due to Beijing’s interest rate cuts, liquidity injections and stock purchases. China’s trade war with the US has rerouted trade flows, and the economy has struggled to recover as President Xi Jinping shifts demand away from the debt-fueled property market. With tariffs looming, there’s pressure on policymakers to act.
“The stimulus policy seems to be not enough to support China’s economic growth, which would be hit by trade frictions with the US,” said Myrdal Gunarto, an analyst at Malayan Banking Bhd.’s Jakarta arm. “That’s why the policy has yet to inject positive sentiments into emerging markets like Indonesia.”
Even Hong Kong stocks gave up their early gains, with the Hang Seng index falling 0.5%. Investors’ attention will now shift toward detailed policies expected from the country’s annual Central Economic Work Conference scheduled to begin on Wednesday.
Read: China Signals Bolder Stimulus for Next Year as Trump Returns
The Communist Party’s decision-making body on Monday made its first major shift in stance since 2011, pledging to embrace a “moderately loose” strategy for monetary policy in 2025. The last time they used that wording was in 2008, during the Global Financial Crisis. The leadership also promised a “more proactive” approach on fiscal policy, stabilizing property and stock markets.
The announcement is the latest in a series of measures to shore up the economy, given the prospect of new US trade tensions as President-elect Donald Trump takes office next month. A policy blitz in September, featuring rate cuts and a new rule allowing brokers to tap central bank funds to buy stocks, spurred a rally in the equity market but has yet to trigger a meaningful turnaround in economic momentum.
“The impact of the shift in China’s policy stance is tempered by the lack of concrete measures and clarity around implementation,” said Charu Chanana, chief investment strategist at Saxo Markets. “For investors looking to bring some alpha into their portfolios by year-end, it’s crucial that we see ongoing announcements and real, implementable measures.”
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