SHANGHAI/SINGAPORE: China’s stock markets pressed ahead in volatile trade on Monday as stimulus promises lifted property shares, though without re-igniting the euphoria of late last month.
The Shanghai Composite and blue chip CSI300 were each more than 1.5% higher by the midday break, adding $146 billion in market value.
However, Hong Kong shares were bumpy, swinging the Hang Seng 0.4% lower in heavy trade.
China’s financial markets have been on a rollercoaster ride since late September when a series of rate cuts, news reports and announcements raised expectations of a major government rescue effort for China’s ailing economy.
At a Saturday news conference Finance Minister Lan Foan reiterated plans to help, promising to raise government debt and use the proceeds to drive growth.
Even though he did not spell out exactly how much the government will spend or how quickly, there was enough in his tone to keep markets broadly encouraged and real estate shares in particular went up in Hong Kong and the mainland.
“The Chinese government is playing the long game here,” said Joseph Lai, chief investment officer at Ox Capital in Sydney.
“There is now a resolve and drive to deliver steady growth for the economy. In this sense, this is better than the government floating up a number to please folks in the next two months.” China’s yuan fell about 0.2% to while five-year government bond futures were broadly steady.
The CSI300 real estate index rose 4.1% and the construction-engineering index was up 3.4%.
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Healthcare and consumer staples shares were more muted but recovered early losses to notch small gains.
Growth boost
China’s long slump in consumer confidence and the property sector is a by-product of a drive by the Communist Party leadership to reduce debt and root out corruption.
Debt restructuring and borrowing promises have encouraged investors that generating growth is top of mind for policymakers.
Goldman Sachs estimated that measures announced on Saturday and last week would possibly add 0.4 percentage points to growth next year, and the bank’s analysts upgraded a 2025 real GDP growth forecast from 4.3% to 4.7%.
The CSI300 is up more than 20% since a slew of policy announcements began on Sept. 24 and investors say furious gains may be giving way to a more steady market.
“China needs a slow bull, not a crazy one, which will eventually burn retail investors,” said Yuan Yuwei, founder and CIO of Water Wisdom Asset Management.
“The Ministry of Finance officials were basically saying: I still have cards up my sleeves, but I’m not showing them now.”
Global commodity markets from iron ore to other industrial metals and oil had a mixed morning, with iron ore futures higher in China and Singapore but the yuan and Australian dollar under pressure.
Weekend data showed inflation slowing and producer price deflation deepening, while a raft of figures due this week - including gross domestic product - are seen likely to be soft and add pressure on Beijing to act quickly.
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