(Reuters) – Chinese stocks rose to their highest levels in two years on Tuesday as mainland markets reopened after a week-long holiday amid a wave of speculation of more stimulus from Beijing.
The CSI300 index rose 10% in early trading to its highest levels since mid-2022 and rose 9.7% and reached its best level since December 2021.
China’s state planning authority announced $28 billion in spending and investment projects on Tuesday and pledged to accelerate financial support, expressing full confidence in achieving this year’s economic growth and development goals.
Heading into the Golden Week holiday, Chinese stocks were already on a tear, with Beijing announcing its most aggressive stimulus measures since the pandemic.
comments:
Rong Ren Goh, Portfolio Manager, Eastspring Investments, Singapore
“Markets were hoping to get some guidance on the size of the fiscal stimulus at this conference – but with the Ministry of Finance not in attendance, this information was unlikely to be provided. Market estimates on stimulus ranged from CNY 2 trillion – CNY 10 trillion.” A number closer to 10 was needed to keep the risk high.
“The Chairman of the National Development and Reform Commission summarized the major announcements and pledges without any new information – disappointing the markets.
“What’s next? No major press conference has been held yet. Therefore, we are likely to see markets consolidate and digest what has already been announced, which is arguably helpful, but not enough to satisfy lofty expectations.”
Matt Simpson, Senior Market Analyst, City Index, Brisbane
“We’re seeing a shakeout at the tops of a very strong rally. But when we get to the point of the rally where my neck hurts to look at, you can say the pullback is overdue.
“Either way, some appear to be taking profits after exceptional gains during Gold Week, and this may prevent others from simply stepping in to support the market immediately. This sets the stage for some cutting around the top, if not a deeper pullback in China markets.”
Rob Carnell, ING Regional Head of Research for Asia Pacific, Singapore
“I think there’s a lot of expectations for more meat on the bones of the fiscal stimulus that’s been talked about recently…talk about consumer vouchers, and maybe more investment in infrastructure spending. So I think there’s kind of an expectation that the positive stimulus message that has gone down Very nicely right before the holiday, you’ll see some additional additions in this press conference today, Hong Kong has been open a little bit longer, and that’s probably more in sync with the global stock markets.
Vasu Menon, Managing Director, Investment Strategy, OCBC, Singapore
“Today’s strong performance is not a huge surprise, as Chinese stock exchanges are likely playing catch-up after the Hong Kong Technology Index and the US Golden Dragon Index rose more than 10% in the first week of October when Chinese markets rose. It was closed on the occasion of Golden Week holiday.
“There are no clear signs that the Chinese economy is improving yet, so this rise is largely driven by sentiment and sparked by Beijing’s stimulus campaign in late September. China’s policymakers are also expected to announce further measures to boost economic growth Today and in the coming weeks, hopes for further stimulus boosted sentiment and contributed to the market’s rise today.
“Ultimately, for the rally to be sustainable, we need to see more fiscal policy and more action to support the economy and the property market. A great deal of hope has been built in the strong rally in recent weeks and we now need to see more government policy action to support the upside.” “
Gary Ng, Senior Economist, Natixis, Hong Kong
“I think today’s movement is mainly explained by the fact that in the Chinese domestic market, the price is rising to a level that investors feel comfortable with.
“Because no one is really sure what is going on with the stimulus… there may be some uncertainty about whether it is higher or lower than market expectations.”
John Rong Yip, Market Strategist, IG, Singapore
“Mainland China stocks are largely playing catch-up, after spending a Golden Week holiday over the past week. Optimism about the latest stimulus efforts remains, although today’s upcoming policy press conference will be closely watched for any follow-up from the side. “Financial.”
Christopher Wong, Currency Strategist, OCBC, Singapore
“So far, the NDRC press conference appears to lack details on stimulus measures. Hopes have been high but implementation has been disappointing. The post-opening rally in Chinese stocks has faded, and the lack of follow-through is a setback to sentiment.”
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