Chinese stocks saw volatile trading on Monday as investors reacted to recent support measures announced by the Ministry of Finance over the weekend. The CSI 300 Index shifted between a gain of 1.7% and a loss of 0.4%, following its worst weekly performance since late July. Meanwhile, a Bloomberg Intelligence index tracking Chinese developers remained largely unchanged after initially climbing more than 4%.
These market fluctuations reflect investor uncertainty, as traders await specific details regarding fiscal stimulus measures. Finance Minister Lan Fo’an, during a Saturday briefing, pledged new policies aimed at boosting the property sector and suggested increased government borrowing. However, he refrained from providing a definitive monetary figure for the planned stimulus. Investors view increased government spending as crucial to extending the stock market’s rally, which was sparked by a central bank-driven stimulus surge in late September.
“Investor sentiment is cautiously optimistic, but the market is now in a wait-and-see phase, looking for concrete figures and detailed measures on consumption and property,” said Xin-Yao Ng, an investment director at abrdn Asia Ltd. “While the Ministry of Finance offered hope, the absence of specific numbers has left some hesitation.”
In Hong Kong, an index of Chinese stocks reversed an earlier gain to fall more than 2%.
During the weekend briefing, Lan indicated that local governments would be permitted to use special bonds to purchase unsold homes, though no specific amount was disclosed. He also hinted at the possibility of issuing additional sovereign bonds and vowed to ease the debt burden on local governments. This raises the potential for a rare revision to the national budget, which could materialize in the coming weeks.
Prior to the weekend, analysts had anticipated that China might inject up to 2 trillion yuan ($283 billion) in fresh fiscal stimulus, including subsidies, consumption vouchers, and financial support for families. This expectation contributed to market volatility, with the CSI 300 Index sliding 3.3% last week ahead of the finance ministry’s announcement.
On Monday, officials from various Chinese departments initiated another briefing to discuss expanding policy support for businesses, further signaling the government’s intent to stabilize the economy.
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