China's Stimulus Rally Extended September Gains to Over 20%

Li Chen
30 Sep, 2024
Hong Kong

Stock market indexes soared in mainland China and Hong Kong as a stimulus rally extended gains to the holiday-shortened third week. 

The Hang Seng index jumped 3% and the mainland-focused CSI 300 index soared more than 6%, and the two widely followed indexes extended September gains to over 20%. 

Investors bid up stocks in the hopes that the latest easing of property market restrictions coupled with monetary policy stimulus and the expected fiscal measure will revive consumer confidence. 

On Monday, three leading cities in China relaxed terms to acquire residential property. 

Guangzhou city authorities removed all restrictions on buying multiple residential properties.

Shanghai and Shenzhen relaxed down payment requirements for first and additional home purchases and permitted non-locals to acquire residential properties, boosting demand for new homes. 

Moreover, the People's Bank of China lowered its mortgage rate following the announcement last week. 

Investors are hoping that policymakers will follow up with significant fiscal measures in about two weeks ahead of the policy committee meeting. 

On Tuesday, financial markets in Hong Kong are closed for the National Holiday, and mainland China markets will remain closed through October 8. 

Investors largely ignored the latest update on the manufacturing sector, highlighting the weakness for the fifth month in a row. 

The manufacturing purchasing managers' index edged higher to 49.8 in September from 49.1 in the previous month, the National Bureau of Statistics reported on Monday. 

The non-manufacturing PMI index, which includes construction and service sector activities, eased to 50.0 in September from 50.3 in the previous month, the official report showed. 

The Caixin China General Manufacturing PMI decreased to 49.3 in September from 50.4 in August and fell to the lowest level since July 2023, according to the latest update reported by S&P Global. 

New orders, foreign sales, and employment all contracted amid weakness in foreign and domestic orders. 

Moreover, business sentiment dropped to the second-lowest on record after new orders fell to the lowest level in two years. 

The government survey data differs from the private survey because the official sample is dominated by larger and state-controlled companies, while the private survey includes more smaller and private companies active in international trade.

 

China Stock Movers 

The Hang Seng index decreased 3.3% to 21,321.97, and the CSI 300 index soared 6.2% to 3,934.08. 

Property stocks soared following the easing of curbs on residential property purchases in three leading southern cities. 

Longfor Group soared 17% to HK $16.04, China Vanke advanced 12.7% to HK $7.52, China Resources Land gained 4.1% to HK $29.05, and Sun Hung Kai Properties declined 0.6% to HK $86.05. 

Alibaba Group jumped 9.6% to HK $112.20, JD.com advanced 10.7% to HK $168.30, and Tencent Holdings gained 4.4% to HK $455.40. 

BYD gained 3.9% to HK $286.40, Li Auto soared 10.1% to HK $110.0, and Xpeng surged 15.3% to HK $54.50. 

Bank of China decreased 1.9% to HK $3.66, China Merchants Bank added 1.6% to HK $38.80, and Industrial and Commercial Bank of China fell 1.7%.