Chinese stock exchanges recover, but industrial production is struggling to recover

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Shanghai and Shenzhen stock exchange

Shenzhen stocks recovering far better than those of Shanghai. Composition very different though, surely Shenzhen ’s volatility higher and somehow intertwined with neighbor Hong Kong’s index.

Shanghai and Shenzhen continue to recover after a new interest rate cut decided by the central bank. However, factories are struggling to resume activities due to the lack of manpower and movement restrictions. Liquidity injections are likely to do little to help small and medium-sized businesses.

Chinese markets rose sharply in the mid-afternoon after the decision of the Central Bank (PBOC) to cut interest rates on short and long-term loans. Shanghai records a 1.84% increase, and Shenzhen also does better with a 2.15% gain.

In recent days, the PBOC had already intervened with a drop in medium-term rates to stimulate the recovery of the economy in China, affected by the impact of the Wuhan coronavirus (Covid-19),  but the recovery in the financial markets is not yet accompanied by an improvement in production. Called by the government to accelerate the recovery of activities, Chinese companies are struggling to cope with the lack of manpower and the interruption of logistics links in a large part of the national territory.