Sep 30 2024: Chinese stocks surged on Monday, with mainland markets poised for their strongest monthly performance in nearly 10 years, following the rollout of additional stimulus measures by Beijing aimed at curbing the economic slowdown.
Mainland China’s benchmark indexes kicked off the week on a high note after recording their best weekly performance in almost 16 years last Friday. The CSI300 blue-chip index gained over 6.22%.
The Shanghai Composite Index climbed 5.7%, while Hong Kong’s Hang Seng Index rose by 3.34%.
Property stocks rallied significantly after China’s central bank announced on Sunday that banks would be required to reduce mortgage rates for existing home loans before October 31, as part of broader policies to support the troubled real estate sector.
In a further move to counter the property slump, Guangzhou city lifted all restrictions on home purchases, while Shanghai and Shenzhen eased similar curbs.
“The market remains surprised by China’s policy actions, and the upward momentum continues,” said Kenny Ng, a strategist at China Everbright Securities International in Hong Kong.
Mainland-listed property stocks rose by 6.4%, while the Hang Seng Mainland Properties Index surged by 8.4%.
Shares in consumer staples last traded up by 7%, with the smaller Shenzhen index soaring by 8.2%.
For the month, the CSI300 index is set to gain more than 18%, marking its best performance since December 2014. Similarly, the Shanghai Composite Index is on track for a 14.8% increase in September, the highest since April 2015. The Hang Seng Index is also headed for its best month since November 2022, with a 14.7% rise.
“A coordinated wave of stimulus suggests China has reached a critical moment, with economic risks hitting Beijing’s tolerance level,” said Eli Lee, chief investment strategist at the Bank of Singapore.
“Beyond the short-term rally, while it’s too early to say definitively, we can’t rule out the potential start of a sustained bull market if Beijing implements sufficient stimulus to reverse macroeconomic trends.”
Sunday’s announcements were part of a broader series of aggressive stimulus measures revealed last week, including significant rate cuts and fiscal support, designed to bolster China’s struggling economy.
These moves have sparked a rally in Chinese equities, which had languished at multi-year lows earlier this month amid concerns about China’s economic outlook.
Boosting investor sentiment, the People’s Bank of China (PBOC) introduced new tools to support the capital markets, including a swap program that facilitates easier access to funding for funds, insurers, and brokers to invest in stocks.
Last week, the CSI300 index surged nearly 16%, while the broader Shanghai Composite jumped almost 13%, marking their biggest weekly gains since November 2008. The Hang Seng Index recorded its largest weekly rise since 1998, and its fifth largest in the past 50 years.
(Story corrected to remove ‘Hong Kong’ from the second paragraph.)
