Stock crash takes toll on Chinese consumer sentiment

In spite of dedicated effort by Chinese regulators and government, which banned short selling, banned selling by large stock holders, loosened margin financing rules, asked banks to roll over margin debt increased China's Margin financing coffer to Yuan 3 trillion by using loans from state owned banks, failing to boost the stock market which was down almost 30% from its peak, is still down about 22%.

There doesn't seem to be much buying there as last vaporization of value tainted confidence.

Though only 15% of the house hold financial assets are in equity, recent panic attack seem to have hurt the consumer psyche deeper than initial thought.

According to a survey, only 37% of the respondents think that it is a good time to buy major items.

Expect consumers to turn risk averse and limit consumption as Beijing struggles with Shanghai composite. By throwing almost anything to shore up markets, Beijing government is risking a lot more in the next crash.

Consumer demand is expected to remain subdued with downside bias over the coming months, which in turn is likely to keep thing tough for producers.

Chinese benchmark stock index Shanghai composite is up 0.21% today, trading at 4026.