Shares in China’s stock markets fell on Tuesday, nearing five-year lows hit in Monday’s session, although the government led by Premier Li Qiang rallied on Monday and announced increased medium- and long-term financial injections into the stock market . to stabilize it, Reuters reports.

Despite Beijing’s official statements, the Shanghai Composite remained below a key psychological level of 2,800 on Tuesday and the CSI300 lost early-day gains, underscoring how fragile investor confidence in China is as the Chinese economy is not performing too well, but the authorities seem reluctant to resort to the main irritant.

The benchmark CSI 300 was down 0.2% by midday, while the SSEC was down 0.4%.

“Statements from senior officials suggest that Beijing is unwilling to engage in short-term growth at the cost of increasing long-term risks,” Nomura analysts said in a note to investors, citing the government’s prospect of fiscally stimulating stock markets.

“We expect the current economic downturn to continue this spring,” Nomura said in a note.

What investors are saying about the fall in China’s stock markets

Derrick Irwin, Emerging Markets Portfolio Manager, Allspring: The government is just adding water to the fire

“Investors hoping for 2024 and anyone hoping the Chinese government will come to the rescue are overestimating that hope right now.

Until there is a bigger crisis, the Chinese government can just throw cups of water on the fire instead of doing something serious, which it probably should.

There is a certain degree of capitulation…at this stage, the markets are not necessarily driven by charts and calculations, but more by emotions and possibly technicals.”

Norman Villamin, chief strategist at UBP: We have been selling since October

“We sold (shares on) the Chinese market in October. We had hoped that more cyclical stimulus would emerge. When it became clear that this was not going to happen, the bottom line was that China is ready to begin restructuring its real estate sector, which means a rather lengthy process.

For the last 30 years, the story of China is this: China is growing fast, China is becoming the world’s manufacturing center, so you should just own (stocks) in China because the economy is doing very well.

The history of China is that there are some sectors that are going to have a really hard time. So you have to be more selective about the companies you buy shares in.”

Diane Rulke, professor at Carnegie Mellon University’s Tepper School of Business: The housing market has begun to collapse

Instead of consumers emerging from the Covid restrictions on spending as they have in the United States, China’s housing market began to collapse… (and people) stopped spending.

China accounts for about 30% of world production; contributes to approximately 22% of global GDP growth; people should want to invest there, but instead they leave quickly.”

Tony Roth: Chief Investment Officer, Wilmington Trust Investment Advisors: We prefer other emerging markets

“We choose managers who, in their own interests and desire to achieve better performance, have a more constructive view of other (developing) countries than China.

This is a gradual process, we do not click on the investment hook, our managers make them. If one of them is too exposed to China, we may decide to allocate less to that manager.”