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If You Want To Make Money In China'S Stock Market, You Must Know These Four Things Next Year.

2015/12/23 16:40:00 16

China'S Stock MarketMaking MoneyChina'S Economy

China's economy is a roller coaster ride.

Chinese

equity market

In the first half of this year, there was a sharp rise and then a failure.

Since then, China's stock market has recovered, but the basis for the fall in the summer stock market has still not been dissipated - concerns about the slowdown in China's economic growth.

Now, worries about the slowdown in China's economy are coming back to people's perspective.

China's economic data for 2015 are expected to be released in January 2016.

Although official data may still achieve a growth target of about 7%, China's growth in 2015 will probably be bad.

Most importantly, China's

currency

At the same time, it is sliding down.

Here are four things that China needs to pay attention to in 2016:

How low will economic growth be?

The days of rapid economic growth are over.

Economists surveyed by CNNMoney expect China's GDP growth rate to be 6.8% in 2015 and 6.5% in 2016.

This is a far cry from China's frequent economic growth rate of two digits in the past, but Chinese government officials and economists seem to think that things are on the right track.

These government officials and economists said China's goal is to bring the total economy to about $12 trillion in 2020.

In the next five years, China needs to achieve an average annual economic growth rate of 6.5% in order to achieve this goal.

This represents an ambitious goal set by China to double its total economy in just ten years.

Now, with the shrinking of China's factory activities, this goal can only be achieved only when the service industry, such as education and tourism, is expanding rapidly.

The structure of China's economy is changing: according to the National Bureau of statistics, the service industry now accounts for 48% of China's gross domestic product.

Economists say that China's economy is moving from manufacturing to services.

Transformation

The trend is that manufacturing accounted for 43% of the total economy last year - and will continue.

Will China cut more interest rates?

Although the market is worried about the rising economic slowdown in China, Beijing has not taken any major stimulus measures this year.

On the contrary, the Chinese government adopted a "mini stimulus" measure, which cut interest rates at a number of times, reduced bank reserve requirements to encourage lending and accelerated infrastructure projects.

In addition, the Chinese government allowed its currency to fall, which has also contributed to exporters.

A government meeting in China next March will conduct a major review of the policy.

But economists do not think China will adopt a "Big Bang" stimulus.

Wang Tao, an economist at UBS, said: "we expect that China will increase its financial and lending support for infrastructure investment, but will not adopt new large-scale stimulus measures."

In the early 2016, China should have another two interest rate cuts.

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Will the renminbi continue to depreciate?


So far this year, China's currency has depreciated by nearly 5% against the US dollar.

Analysts believe that the yuan will further depreciate, reflecting China's weak growth and trade.

An economist at CNNMoney estimates that by the end of 2016, the yuan will probably fall to 7.50 yuan against the US dollar, that is to say, it will depreciate by 16% at the present level.

China has been trying to get its currency to be accepted in trade and investment and become a global currency.

In November, the International Monetary Fund agreed that China's currency will be included in the fund's exclusive currency basket since October 1, 2016.

Now, with the RMB in the spotlight of the world, China is under greater pressure. This pressure requires China to allow market forces to play a more important role in the RMB exchange rate.

As part of the effort to allow the market to play a bigger role, the Chinese government announced last week that it will start tracking the value of the Renminbi with reference to a basket of world currencies instead of just pegging the US dollar.

Globally, the importance of yuan is increasing.

In October, the renminbi became the fourth currency of international payments, according to Swift, which provides global trading services.

Can China stabilize its market?

Although most of the Chinese market is still dominated by domestic investors, Beijing wants to encourage more foreign capital to participate.

The extreme volatility of China's stock market this year will make foreign capital entry more difficult.

The Chinese government has taken some measures to combat the crazy market volatility.

Starting next January 1st, China will implement circuit breaker measures for the stock market - in fact, emergency braking.

If a major Chinese stock market index rises or falls by more than 5%, the stock market will suspend trading for 15 minutes.

Regulators are also considering changing the rules of listing.

Beijing has just lifted a ban on IPO for four months.

In addition, China also plans to connect the Hongkong stock market and the Shenzhen stock market in 2016, giving investors in mainland China and Hongkong access to these two markets.

But experts say if China wants to connect the Hongkong stock market and Shenzhen stock market, China needs to rebuild the confidence of domestic and overseas investors. This year, the plan to connect Hongkong and Shanghai stock market failed.


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