China’s runaway rally stutters on stimulus uncertainty

Bull statues are placed in font of screens showing the Hang Seng stock index and stock prices outside Exchange Square, in Hong Kong, China, August 18, 2023. REUTERS/Tyrone Siu/File Photo Purchase Licensing Rights
Published October 9, 2024
SINGAPORE, Oct 9 (Reuters) – Chinese shares slumped and commodities were struggling to find a footing on Wednesday as investors tempered expectations for a robust Chinese economic recovery, while a downbeat outlook from New Zealand’s central bank sent the kiwi to a seven-week low.
The Shanghai Composite (.SSEC), opens new tab and blue-chip CSI300 (.CSI300), opens new tab nursed losses of around 4% in afternoon trade, paring much larger falls when the finance ministry called a press conference on fiscal policy and raised expectations of stimulus.
Hong Kong’s Hang Seng (.HSI), opens new tab bounced to flat and the Australian dollar shed losses.
China’s surging markets had turned suddenly fragile and commodities from oil to metals fell on Tuesday when a news conference from China’s National Development and Reform Commission yielded no major new stimulus details.
“To be fair only the Ministry of Finance or State Council can adjust the budget,” said Nick Ferres, chief investment officer at Vantage Point Asset Management, as focus shifted to the Oct. 12 announcement and Monday’s market reaction.
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SOURCE: www.reuters.com

RELATED: What’s Next For Chinese Stocks After Stimulus Rally Stumbles?

Pedestrians walk past a sign showing the numbers of the Hang Seng Index in Hong Kong on September 27, 2024. Peter Parks / AFP via Getty Image
Published October 9, 2024

Chinese stocks came under pressure on Tuesday after a disappointing update from the government tempered some of last month’s exuberance that propelled Chinese stocks out of a bear market in recent weeks.

The country’s economic planning agency said Tuesday it would accelerate some planned investments meant to help the country meet its 2024 growth goals but abstained from outlining new stimulus measures.1

Late last month, the Chinese government announced a spate of monetary stimulus measures including lowering banks’ reserve requirements, cutting interest rates, and supporting equity markets. The long-awaited package restored some investor confidence in China, prompting a massive rally. The CSI 300, an index of mainland China’s largest stocks, soared 25% in a week. Hong Kong’s Hang Seng index also advanced more than 25% to a 2-year high.

Investors were expecting more from Tuesday’s announcement. The CSI 300 jumped about 11% Tuesday morning as mainland markets reopened after a weeklong holiday, but pared its gains and closed up 5.9%. The Hang Seng tumbled more than 9% on Tuesday.

 

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SOURCE: www.investopedia.com

 

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