In a peculiar manner, April 27 was a magical day for the Chinese stock markets. It was amid the worst days of the COVID lockdowns in Shanghai.
Nonetheless, on that day, the Shanghai Stock Exchange and the Shenzhen Stock Exchange both ended a four-month losing skid and began a rally. Almost simultaneously, the US stock markets began to fall.
Is China inflating the market in order to entice Wall Street investors who have withdrawn from the US equities market?
Let's start with what transpired on the Chinese side. The Chinese stock market performed abysmally throughout the four-month period from December of last year to April 27.
The Shanghai Stock Exchange Index dropped 20%, while the Shenzhen Stock Exchange Index dropped one-third of its value. They decided to turn around on April 27.
China's A-shares rose on that day, with the Shanghai Stock Index climbing 2.5 percent and the Shenzhen Stock Index rising 4.4 percent. Since then, they have been on an upward trend.
They hoped to draw capital fleeing US stock markets to China. To do this, Chinese officials had to artificially boost the market.
As the US market sank into bear territory, Chinese investors collectively and repeatedly gained more optimistic in their capital market.
Given China's current economic position, such investor behavior is difficult to believe—unless, of course, the collective Chinese investor is the Chinese government.
You may say, that’s purely speculation. Yes, it is my speculation, but I have my reasons. To know all reasons which prove me right please check out our latest article.