China announced on Sunday that is was going to put a stimulus package worth approximately $585 billion dollars into effect over the next two years.
A Marketwatch article entitled “China unveils stimulus package as growth slows,” describes the use of the funds as mostly infrastructure-related:
“Funds from the stimulus package will be spent in ten major areas that include low-income housing, rural infrastructure, water, electricity, transportation and improvements in the environment.”
World markets rallied sharply with the news, posting 3-5% throughout Asia. The US soared in early Monday trading as well – gaining 3-4% in just a few hours.
According to the Emerginvest Asian Heat Map, almost the entire continent had solid gains. China, India, and Russia all soared 5-7%.
However, the upward trend did not last long as the article also foreshadowed the declines: “Economists said the size of the headline figure was less important then than how quickly authorities could get the funds into the economy to help offset slowing growth and a housing sector contraction.”
Investors quickly realized that it would still take time for the plan to be executed (only approximately $14B to be spent by year-end), and that the world is already deeply entrenched in recession. That, among other corporate news pushed stocks downward again in late trading Monday and so far on Tuesday.
Stocks globally have fallen throughout trading yesterday and today. As of this writing the Dow is down approximately 4% today, the NIKKEI is down 3%, the Hang Seng is down 4.77%, and Australia is down 3.44%. A Forbes.com article entitled: “Global Markets Scorecard,” suggested that Chinese energy stocks are due to come out of the slump with extremely high growth (supported by an argument of post-recession energy demand and current low-valuations. That still remains a long way off however, and it is yet to be seen how quickly the Chinese government will start executing on their plan and pumping capital into their economy.
A Marketwatch article entitled “China unveils stimulus package as growth slows,” describes the use of the funds as mostly infrastructure-related:
“Funds from the stimulus package will be spent in ten major areas that include low-income housing, rural infrastructure, water, electricity, transportation and improvements in the environment.”
World markets rallied sharply with the news, posting 3-5% throughout Asia. The US soared in early Monday trading as well – gaining 3-4% in just a few hours.
According to the Emerginvest Asian Heat Map, almost the entire continent had solid gains. China, India, and Russia all soared 5-7%.
However, the upward trend did not last long as the article also foreshadowed the declines: “Economists said the size of the headline figure was less important then than how quickly authorities could get the funds into the economy to help offset slowing growth and a housing sector contraction.”
Investors quickly realized that it would still take time for the plan to be executed (only approximately $14B to be spent by year-end), and that the world is already deeply entrenched in recession. That, among other corporate news pushed stocks downward again in late trading Monday and so far on Tuesday.
Stocks globally have fallen throughout trading yesterday and today. As of this writing the Dow is down approximately 4% today, the NIKKEI is down 3%, the Hang Seng is down 4.77%, and Australia is down 3.44%. A Forbes.com article entitled: “Global Markets Scorecard,” suggested that Chinese energy stocks are due to come out of the slump with extremely high growth (supported by an argument of post-recession energy demand and current low-valuations. That still remains a long way off however, and it is yet to be seen how quickly the Chinese government will start executing on their plan and pumping capital into their economy.
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