China's Stimulus Rally Extended Weekly Gains to Over 10% Ahead of Expected Fiscal Measures

Li Chen
27 Sep, 2024
Hong Kong

Stock market indexes soared for the fourth consecutive day after Chinese leaders pledged to announce more measures to revive faltering economic growth. 

The People's Bank of China lowered the reserve requirement ratio for all banks by 50 basis points on Friday, following the announcement on Tuesday. 

The Hang Seng index and the CSI 300 index jumped more than 3% and extended their weekly surge to over a whopping 13% amid a stock-buying spree by investors. 

Today's market surge was driven by the expectations of more fiscal measures, according to an official statement released after an unexpected Politburo meeting chaired by President Xi Jinping. 

“The vast number of party members and cadres must have the courage to take responsibility and dare to innovate,” noted the statement released after the meeting.

The meeting underscored the urgency for sharpening the focus on economic priorities as the top leadership shifts their attention away from military expansion and modernization. 

The emergency policy meeting focused on boosting government spending, effectively implementing current policies, and increasing efforts to achieve an economic growth target rate of around 5%. 

Moreover, the meeting called for additional necessary spending to stabilize the slumping property market and increase funding for local government. 

Chinese leaders stepped up calls to revive economic growth after initial measures released four months ago to support the property market failed to make a dent. 

In a much-delayed move, China's State Council announced 24-point guidelines to strengthen protection for gig workers and encourage job creation by state-controlled entities. 

The yuan traded around 7.0 against the U.S. dollar, but bank stocks traded down. 

Despite economic revival talks by top leaders, there were no clear and quantitative measures announced after the meeting. 

Investors are hoping that Beijing will roll out large and meaningful measures after the National Holiday and avoid ramping up of wasteful spending carried out after the 2008 global financial crisis. 

 

China Stock Movers 

The Hang Seng index jumped 3.5% to 20,621.90, and the mainland-focused CSI 300 index soared 3.8% to 3,678.98. 

Alibaba Group jumped 5.4% to $103.60, JD.com advanced 8.5% to $153.60, Tencent Holdings added 2.7% to HK $441.80, and Baidu Inc. advanced 5.6% to HK $101.20. 

Bank of China decreased 2.5% to HK $3.75, ICBC fell 3.1% to HK $4.68, and China Merchants Bank fell 1% to HK $37.25. 

China Vanke Company jumped 11% to HK $6.38, China Resources Land gained 3% to HK $27.35, and Longfor Group advanced 12% to HK $13.22.