China’s stock markets finished in the green for the first time in five days on Tuesday, as indications of an economic slowdown sparked stimulus hopes. A significant decline in exports was the culprit this time around, underlining the declining demand for China’s goods.

Stocks in the U.S. also gained on stimulus hopes. The first such measures, directed primarily at the markets, were announced late on Monday. Gains continued into Tuesday boosted by announcements as well as expectations of broad based stimulus measures.

Export Slump Continues

In the first seven months of 2015, the country’s exports fell 0.8% year over year, while imports shrank 14.6%, indicating weak demand in international and domestic markets. In July alone, exports were down 8.3% year over year in dollar terms, while imports fell 8.1%.

Declines were marginally lower in August, but the overall trend continued to reflect economic weakness. Exports dropped 5.5% year over year in dollar terms. Meanwhile, imports declined 13.8% in dollar terms.

August shipments were affected by the explosion in the port facility in Tianjin. The closure of factories due to the parade held to mark the 70th anniversary of China’s WWII victory is also responsible for the slump in exports. A decline in expenses on oil imports possibly explains the lower import bill.

Market-Specific Measures

Late Monday, authorities said that shareholders holding stocks for more than a year would not have to pay personal income tax on dividends. This is another measure targeting at reducing market volatility caused by speculation.

The logic is that such a move would encourage investors to hold equities for a longer period. Additionally, investors holding shares for a month to a year would have to pay on half the dividend tax. These measures were implemented starting Tuesday.

Only a few hours earlier, China’s major exchanges revealed plans to introduce another measure aimed at curbing volatility. Better known as a “circuit breaker”, the measure would involve suspension of trading for half an hour if the CSI 300 increases or a decline by 5% from the last day’s close before 2:30 pm.

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