News EditorChina’s Stock Markets See Volatility Amid Stimulus Promises; Property Shares Lead Gains
Shanghai/Singapore (Oct. 14, 2024) – China’s stock markets experienced volatile trading on Monday, with property shares leading gains as promises of government stimulus buoyed investor sentiment. By midday, the Shanghai Composite and blue-chip CSI300 indexes had each risen by more than 1.5%, adding approximately $146 billion in market value. However, Hong Kong’s Hang Seng Index faced more turbulence, falling 0.4% in heavy trade.
Chinese financial markets have been highly volatile since late September, driven by expectations of a government-led economic rescue. A combination of interest rate cuts, news reports, and policy announcements have fueled these expectations. The Finance Minister, Lan Foan, reiterated government plans to stimulate growth during a press conference on Saturday, promising to increase government debt to fund growth initiatives. However, specifics regarding the size and timing of the spending remain unclear.
Real estate shares responded positively to these developments, with the CSI300 real estate index surging 4.1% and the construction-engineering index rising by 3.4%. The broader market saw more muted activity in sectors like healthcare and consumer staples, which registered small gains after recovering from early losses.
Growth Outlook
Investors are cautiously optimistic about China’s long-term economic strategy. Joseph Lai, Chief Investment Officer at Ox Capital in Sydney, noted, “The Chinese government is playing the long game here. There is now a resolve and drive to deliver steady growth for the economy, which is better than short-term fixes.” Analysts at Goldman Sachs have estimated that recent stimulus measures could boost China’s GDP growth by 0.4 percentage points in 2025, leading them to raise their growth forecast from 4.3% to 4.7%.
Since the series of policy announcements began on September 24, the CSI300 has gained more than 20%. However, market observers believe the initial surge is giving way to more measured trading. Yuan Yuwei, Founder and CIO of Water Wisdom Asset Management, commented, “China needs a slow bull, not a crazy one, which will eventually burn retail investors.”
Challenges Remain
Despite the positive market response, challenges persist. China’s yuan fell by 0.2%, while five-year government bond futures remained steady. Global commodity markets also faced mixed outcomes, with iron ore futures rising in China and Singapore, but the yuan and Australian dollar experiencing downward pressure.
Recent economic data show a continued slowdown in inflation and deeper producer price deflation. With key economic indicators, including GDP data, expected this week, analysts anticipate additional pressure on Beijing to introduce more comprehensive economic measures.
As China continues to navigate economic uncertainties, the government’s focus on steady, sustainable growth may offer a longer-term solution to the country’s ongoing challenges in the property sector and broader economy
