While the world was transfixed on the sharp plunge in China’s stock market from mid-June, it appears that Chinese consumers weren’t nearly as concerned by the sharp gyrations in Shanghai and Shenzhen as their colleagues from overseas.
Indeed, it appears they couldn’t care less, with consumer confidence rising strongly in July according the latest Westpac-MI consumer sentiment index for July.
The gauge rose by 1.9% to 114.5 for the month, building on the modest increase previously recorded in June.
Interestingly, all five components that make up the headline index improved, as shown below.
- Personal finances: current 103.6 (+2.57%)
- Personal finances: expected 117.3 (+2.53%)
- Business conditions: 1 year 114.8 (+2.14%)
- Business conditions: 5 years 133.4 (+0.50%)
- Durable buying conditions 103.3 (+2.48%)
On the plunge in China’s stock market, at its worst when the responses were being collated, the report noted the survey was a timely experiment on the connection between China’s onshore equity market and the collective psyche of Chinese consumers.
What is revealed was “stunning” in their opinion:
“The majority of consumers didn’t just shrug at the stockmarket turmoil – they laughed it off”.
While the report noted that consumers in larger-tier one cities, those deemed more likely to own stocks, were not completely immune to the declines with the current personal finances indicator for Shanghai, Guangzhou and Beijing falling, by-and-large most Chinese consumers couldn’t care less what the stock market was doing.
While it may be hard to do – China is the world’s second-largest economy and the largest consumer of raw materials globally – perhaps there’s a lesson for offshore investors from the survey: don’t get too hung up on the swings in Chinese stocks – based on this evidence they’re largely irrelevant.