It’s no secret that the Chinese stock market was off to a terrible start this 2016, as the government considered lifting emergency measures only to end up adding more uncertainty in the financial markets. This led US equities to chalk up their worst weekly open since records began, wiping off billions in value from the markets in just a few days.
According to the Chinese horoscope for the year, the next few months could be mired in even more uncertainty. Volatile moves could be seen, perhaps even worse than those seen last year. What else could the Chinese New Year bring for the financial markets?
The Lunar New Year is officially set to start on February 8, marking the start of festivities at the turn of the Chinese calendar. These celebrations could usher in increased tourism and business activity for the mainland and Chinese territories, potentially providing a temporary reprieve for the tumbling markets as consumer confidence picks up.
Keep in mind, however, that financial trading in these markets would be halted during the Chinese New Year festival itself. Other countries in the Asian region typically suspend stock trading on that same day, keeping liquidity restricted and setting the stage for potentially large gaps when markets reopen later on in the week.
During these times, financial market players in China also take time off to visit their family in provinces or vacation in other parts of the globe. This could spur stronger business activity and sales for global brands, also shoring up their numbers around the middle of the quarter and boosting equity market performance in other regions such as the US and Europe. Retailers are known to offer good bargains targeting Chinese consumers around this time of the year, taking advantage of the surge in shopping activity then.
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