000166

06806

<p>Shenwan Hongyuan pointed out that in the domestic wealth effect, the real estate market has a high proportion while the stock market has a low proportion. The high volatility of the stock market has hindered the formation of the wealth effect. A "slow bull" market in stocks contributes to a sustainable wealth effect, and stable housing prices are more beneficial for consumption in low-income areas. Since 2016, the wealth effect of the real estate market has gradually replaced the stock market, and the appreciation of residents' assets has boosted consumption tendencies</p>

- The article discusses the macroeconomic significance of the wealth effect, highlighting how rising asset values, particularly in real estate, boost consumer spending in China since 2016.  
- It notes that while housing has increasingly replaced stock market wealth effects, the relationship between asset growth and consumption is complex, with variations in consumer behavior across income levels.  
- The authors suggest that stabilizing housing prices in lower-income areas can enhance consumption, while fluctuations in the stock market can weaken the wealth effect, emphasizing the need for a balanced approach to economic policy.

Underestimated "wealth effect"?