China's stock markets supported by Beijing's measures
China’s stock markets supported by Beijing’s measures

29 August 2023 – Chinese stocks saw a rise of up to 5.5% at the start of the week. This is due to government interventions to stabilize real estate and capital markets. And lawsuits to lift EU anti-dumping duties extended to Turkey against hot-rolled stainless steel from Indonesia published.

Beijing’s measures support China’s stock markets

Chinese stocks experienced a rise of up to 5.5% at the beginning of the week. This is due to government interventions to stabilize real estate and capital markets.

Loosening of credit guidelines: a blessing for homebuyers

Local governments in China are now allowed to relax stricter credit guidelines for “secondary buyers.” In Beijing, these have previously been required to pay down 80% of the property value, while only half is required for first-time buyers.

Further measures by the Chinese government

  • The transaction tax on shares has been cut from 0.1% to 0.05%, the first reduction in China since 2008.
  • Major shareholders are no longer allowed to sell their shares when prices fall below IPO levels.

Overall impact on capital flows and investment

These measures could affect capital flows similarly to additional investments of nearly 100 billion euros per year. Although they are a step in the right direction, further measures are expected to address the challenges in the real estate market and to attract new foreign investors.

Positive outlook: The future of the Chinese markets

The measures taken are an encouraging start and could serve as a catalyst for further positive developments in China’s economy. The government can be expected to take further steps to stabilize markets and boost investor confidence.

Lawsuits filed against expanded EU anti-dumping duties

In April 2023, the European Commission had extended existing anti-dumping duties against hot-rolled stainless steel originating in Indonesia to Turkey. The two companies at the center of the proceedings, Marcegaglia Specialties (Italy) and Çolakoğlu Metalurji (Turkey), subsequently filed complaints at the European Court of Justice CURIA in July 2023 against the EC’s decision and separately demanded the repeal of the measure.

Judgment likely to be a long time coming

Any rulings are not expected for another year, if at all, probably even later, as a look at other lawsuits of this kind quickly makes clear. Regardless of how CURIA should rule, it is to be expected that corresponding appeals will be filed afterwards.

It is very likely that this type of behavior, as accused in proceeding by the European steel producers and the European Commission, which has very probably also led to the recently initiated anti-circumvention proceedings against cold-rolled stainless steel from Indonesia via Taiwan, Vietnam and Turkey.

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