00:00Now, Xiaolin Chen is the head of international at Crane Shares.
00:04She's joining us on the program at the moment.
00:07Walk us through this decision, right, to essentially try and cut, right, shares here by the PBOC.
00:14How significant is that in essentially the surge we're seeing in the market today?
00:19It is quite significant, not because funding will become cheaper,
00:24but also because Beijing is making market support more durable.
00:28I think the rate has come down.
00:31It's becoming a permanent policy mechanism rather than a temporary response to market volatility.
00:37We're also seeing a response banks have applied for more than maybe $200 billion in funding quotas.
00:43Alongside that, Central Bank has completed a separate maybe about $100 billion swap options
00:49to support the institutional equity investments.
00:52I think the broader message is that capital market stability matters to China.
00:56It matters for corporate financing, household confidence, and funding for innovation.
01:01Now is the combination of cheaper financing, a standing mechanism, and institution beginning to use it.
01:08I think the next step is the persistent delivery so that investors can see this as a reliable policy commitment.
01:14Right, the CSI 300 had probably one of its worst months in October in over a decade, right, down by
01:21over 8.5%.
01:22To what extent is that linked to the sluggish demand and the property crisis we're seeing in the Chinese economy?
01:28I mean, domestic demand and property, probably to a certain extent, are an important part to explain this market performance,
01:38but they are not the whole explanations.
01:41Properties matter because it influences how households feel about it, about their wealth, about their willingness to spend.
01:47But we should also distinguish between the Chinese economy as a whole and a different business in the market.
01:54Internet platform, cloud computing providers, or property developers may have very different earning drivers.
02:01We now see actually very, very attractive valuation for Chinese companies, particularly in the Internet and technology stocks.
02:08Given their forward earning projection, they are now trading at a value stock price, believe it or not, with a
02:16growthier sector for such.
02:18So the constructive policy approach definitely improves the stability for the financial market, can therefore support confidence.
02:25Right, my last question for you.
02:26The Star 50 Index, it's around 40% lower, right, compared to the peaks that we saw back in June.
02:31Is there any correlation between that and the sell-off in other tech stocks that we've seen, for example, in
02:36the American market?
02:37Great question.
02:38Chinese technology stocks are not isolated from global investments.
02:42You know, when investors reassess AI spending valuation and timing of returns, that affects risk appetites across market.
02:49But it is important to recognize that Chinese technology companies and AI companies, particularly in Star 50 funds, have a
02:58very distinguished advantage.
03:00They operate within a very deeply connected domestic ecosystem in China.
03:04They can bring together supply chain infrastructure software, a vast range of commercial applications, with a potential domestic market for
03:121.4 billion people.
03:13So we do expect the stock market to continue to do well from here.
03:19Indeed.
03:19Thank you very much for that.
03:21That's Shirlin Chen from Crane Shares.
