Mainland Chinese markets experienced a significant increase of more than 10% on Tuesday as trading resumed following the Golden Week holiday. The benchmark CSI 300 index saw notable gains, driven by the performance of healthcare and real estate stocks.
According to data from LSEG, a number of stocks hit the upper limit of 20% on the Shanghai stock exchange. It is important to note that the Shanghai and Shenzhen stock exchanges have a 10% upper limit for mainboard stocks, while stocks listed on Shanghai’s STAR market, which is comparable to the NASDAQ, have a 20% limit.
In contrast to the positive momentum seen in mainland China, Hong Kong’s Hang Seng index plummeted by 6%. Meanwhile, Shanghai Composite pared some gains as the session progressed to up 4.6%.
Investors are eagerly anticipating further policy guidance from China’s leading economic planning authority as mainland markets resumed trading following a week-long holiday.
A group of high-ranking officials from the National Development and Reform Commission, led by chairman Zheng Shanjie, is scheduled to update the media on the progress of stimulus policies at a press briefing on Tuesday at 10 a.m. local time.
Notably, Pierre Lau, China equity strategist at Citigroup, expressed optimism regarding the current market conditions. Lau predicted that Beijing is likely to introduce more significant economic stimulus measures than what the market anticipates, projecting a forthcoming 3 trillion yuan (US$427.5 billion) consumption support package.
Citigroup has adjusted its targets, raising the Hang Seng Index goal by 24% to 26,000 by mid-2025, while also elevating the MSCI China Index target by 27% to 84 within the same timeframe.
Meanwhile, Goldman Sachs significantly increased its target prices for MSCI China from 66 to 84 and for the CSI 300 Index from 4000 to 4600. The firm also made adjustments to its industry allocation, moving insurance and other financials to overweight, metals and mining to neutral, and telecommunications services to underweight.
Despite a significant surge in the Chinese stock market, both domestic and foreign institutions remain optimistic. On October 5th, Goldman Sachs raised its rating on the Chinese overall market to “overweight” in its latest report, predicting a further increase of 15-20%.
