China Stocks Plunge In Hong Kong Amid Dashed Hopes of Additional Stimulus

Li Chen
08 Oct, 2024
Hong Kong

Stock market indexes in mainland China soared after investors returned from a week of holidays, but market enthusiasm quickly faded. 

Trading in Shanghai and Shenzhen was in focus as investors scrambled to catch up with market gains during the Golden Week of holidays, as retail investors returned. 

However, the record one-day surge of 10.8% quickly dissipated to an increase of 6% after the top planning body failed to announce any new significant fiscal measures. 

The National Reform and Development Commission announced at a press conference implementation plans following the recently announced monetary policy measures to revive investor confidence and support the residential property market. 

However, the commission failed to announce any new and concrete steps to restore consumer confidence, tackle elevated unemployment, and revive manufacturing activities. 

Market attention now shifted to the finance ministry, as investors hope for additional stimulus measures that could revive retail sales and create more jobs for recent graduates. 

Retail investors in China have lost hope of a market rebound after benchmark indexes plunged as much as 40% over the last four years but are prone to be drawn to periodic short-lived market rallies that are driven by policy announcements. 

Policymakers, at least on three occasions over the last two years, have drummed up investor interest by dangling piecemeal measures, and these measures have failed to alter the downward trajectory in consumption, employment, and economic growth. 

The latest market euphoria may have hit the reality wall for the third time this year as investors reassessed policymakers limitations in arresting the current deepening economic growth downturn. 

"Investors have lost touch with the sense of reality with the hopes of a stimulus for an economy that is still growing at a 5% annual rate, surpassing the U.S. and the Euro Area by a wide margin," said Manish Shah, Chief Investment Officer of the Miami  Beach, Florida-based Tollbooth Strategy. 

 

China Stock Movers 

The Hang Send index plunged 7.6% to 21,334.37, and the mainland-focused CSI 300 index gained 4% to 4,181.12. 

Alibaba Group declined 5% to HK $108.20, JD.com decreased 8.5% to HK $169.30, Tencent Holdings dropped 7.7% to HK $444.60, and Baidu plunged 8.6% to HK $101.50. 

Property stocks were among the leading decliners in Hong Kong trading. 

Longfor Group Holdings plunged 18.9% to HK $13.56, China Vanke decreased 28% to HK $7.87, and China Resources Land dropped 10.6% to HK $26.75. 

Bank of China decreased 3.9% to HK $3.75, China Construction Bank dropped 3.5% to HK $5.96, and Industrial and Commercial Bank of China eased 2.9% to HK $4.69.