Chinese investors have "laughed off" this month's gyrations in the country's sharemarkets, according to the authors of a consumer sentiment survey, although they now see stocks as undervalued.
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The Westpac MNI survey for July, released on Wednesday, found the mood in the country continued to improve in July, with the headline index up 1.9 per cent, to 114.5 points.
This is just below its level a year ago, as concerns about slowing growth and the housing market began to take hold.
Wild swings in the stock market this month, however, have not affected sentiment as much, according to the survey's findings, although respondents noted the hit to personal wealth in specific questions about stock market expectations.
"Investment return has suffered and so have stock market expectations," Westpac and MNI, part of the Deutsche Börse Group, said.
"Stock price sentiment, however, a measure of whether equity prices are expensive or cheap, is perhaps most telling, suggesting that consumers currently think that shares are undervalued in contrast to June when they were considered expensive," they said.
The big picture
MNI Indicators chief economist Philip Uglow said that despite the sharp correction in equity prices, consumers appeared to be more interested in the bigger economic picture.
"Much airtime has focused on the potential negative wealth impact of the stock market correction, but the survey bears out our own view that it will be limited," he said.
All five sub-indices of the consumer survey climbed between June and July, with sentiment on current finances up 2.5 per cent month-on-month, and business conditions for the year ahead up 2.2 per cent. The mood on expected finances also climbed 2.5 per cent from June.
Year on year, however, the headline index was still down 0.3 per cent, while sentiment on current personal finance was 4.5 per cent lower. Sentiment about business conditions for the year ahead was, conversely, up nearly 4 per cent on a year ago.
The survey was taken among 1,000 people across 30 cities during the first 10 working days of the month, when the main Shanghai Composite index lost 16 per cent.
Equity prices subsequently recovered when the government intervened with a range of supportive measures, but on Monday this week they lost more than 8 per cent in one day. Analysts expect further market turbulence in coming weeks.
"As the survey was in the field during the worst moments of the stunning collapse in the stock market, this was a true test," wrote Westpac and MNI.
"The conclusion is equally stunning: the majority of consumers didn't just shrug at the stock market turmoil – they laughed it off."
