China markets set to erase gains seen since July politburo meet; MSCI China index drops over 1%: Report

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banking system have been triggering the recent selloff in the Chinese markets. Worries surfaced over likely deflationary pressures threatening to undermine corporate profits and reduced potential returns.

Also Read: China central bank cuts rates to boost economic recovery; a second rate cut in three months In its efforts to boost economic recovery, China’s central bank stepped up monetary easing and cut key policy rates for the second time in three months on Tuesday, However, policy announcements have failed to revive investors sentiment amid the economic downturn. Investor pessimism in the Chinese market also deepened as investment banks around the world cut their economic growth forecasts for the Asian country for 2023.

JPMorgan Chase & Co.’s team lowered its full-year projection to 4.8%. In May, the bank had been predicting a 6.4% expansion, among the highest calls.

Also Read: President Xi under pressure to take bold steps as China's economy slows after surprise rate cut Sentiment was hit further as the latest data showed home prices falling again in July. The property sector’s turmoil has been at the center of China’s economic troubles given its importance to growth and implications across household wealth and the financial system, Bloomberg report said.