(Bloomberg) — Chinese stocks ended morning trading higher as investors assessed the potential impact of support measures announced by the Treasury Department over the weekend.
Most Read Articles on Bloomberg
The CSI300 index was up 1.5% at the lunch break Monday, near its trading high, after falling as much as 0.5% earlier. Friday marked the worst week since late July. Bloomberg Intelligence’s index of Chinese developers rose 1.7%, paring an earlier gain of more than 4%.
The price action supports cautious optimism as traders await further details on fiscal measures. Finance Minister Lan Foan promised new measures to support the real estate sector and signaled more government borrowing at a press conference on Saturday, but stopped short of giving a major dollar figure. Increased fiscal spending is seen as key to sustaining the stock market rally sparked by the central bank’s stimulus package in late September.
“Despite the lack of major fiscal stimulus, the Treasury press conference remained an upside surprise for us,” economists at HSBC Holdings, including Jing Liu, wrote in a note. “Improved risk appetite is creating a wealth effect in both stock and real estate markets, and we expect this will continue to be the mainstay of policy.”
An index of Chinese stocks listed in Hong Kong pared most of the 2.7% decline.
Data on Sunday showed that China’s deflation problem became more entrenched in September, with consumer prices remaining weak and factory gate prices also continuing to fall. Meanwhile, officials from various Chinese ministries vowed to step up policy support for businesses in separate briefings on Monday.
“With upside cap”
Lunn and his colleagues at a news conference Saturday said local governments would be allowed to use special bonds to buy unsold homes, although they did not specify the amount. Mr. Lunn hinted at room for more national debt, vowed to ease the debt burden on local governments and hinted at the possibility of rare budget revisions in the coming weeks.
Investors and analysts polled by Bloomberg said before the weekend that China would on Saturday release up to 2 trillion yuan ($283 billion) in new fiscal stimulus including subsidies, consumption vouchers and financial support for families raising children. I expected that.
the story continues
Market volatility increased in the lead-up to the Treasury’s meeting, with the CSI300 index down 3.3% last week. As the bull market subsides, there may be growing concerns that this rally will be another false dawn. Markets have been caught in start-stop cycles of gains and losses several times in the past, as the Chinese government’s gradual approach to stimulus only produced short-term rebounds.
Investor Xin Yao Ng said, “The November US election and the FOMC could postpone the large-scale stimulus package until December or later, and investors are looking ahead to the results before that and in the third quarter. “There is a possibility that the market will shy away from the market, so the upside may be somewhat limited for now.” Director of abrdn Asia Ltd.
–With assistance from John Cheng.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
