Revival of Confidence: How Mainland China’s Economic Stimulus Measures Resurrected Hong Kong’s Stock Market

Opinion | Hong Kong's stock market has at last stabilized

The economic stimulus actions taken by mainland China have successfully instilled a vital sense of confidence among investors toward both its own and Hong Kong's monetary markets.

Prior to the previous week, the China A50 had seen a decrease of approximately 45 per cent from its high point in February 2021. Concurrently, the stock market in Hong Kong had experienced a decline for four consecutive years. Investors had surrendered.

The mainland officials have wisely been hesitant to potentially cause adverse effects, as per the law of unintended consequences, by injecting significant sums of money into the economy. Historically, huge sums of money have been consumed by property and stock market bubbles. The ensuing financial crash after this fleeting boom has triggered local government and property company financial crises that have been more severe than any potential economic slowdown.

Western central banks appear to have grasped the concept that economic stimulation necessitates a significant surge of news to jolt economies back to health. Over the past few decades, the West has pumped an immense amount of money into their economies to ward off economic downturn.