The resurgence in onshore Chinese stocks following a week-long holiday was short-lived as traders expressed doubts about Beijing’s commitment to introducing additional stimulus measures, resulting in a decline in shares in Hong Kong and a sharp decline of gains in mainland stocks.
Initially, the benchmark CSI 300 Index surged by almost 11% in the opening minutes of trading on Tuesday, but the rally diminished rapidly with only a modest 2% increase within the first hour. Prior to the Golden Week break, the index had recorded gains for nine consecutive sessions until September 30. Conversely, a gauge of Chinese stocks listed in Hong Kong plummeted by nearly 10% after soaring by close to 11% during the onshore markets’ closure. The Hang Seng Index dropped more than 6%.
A conference held on Tuesday by China’s principal economic planner, the National Development and Reform Commission, to present a set of policies intended to stimulate economic growth failed to significantly impact the market. Despite indications of increased trading turnover on the Shanghai Composite Index reaching 1 trillion yuan, the market response was underwhelming.
The China state planner chairman announced several key points regarding the policy package:
- Intensifying counter-cyclical adjustments and enhancing policy coordination
- Accelerating fiscal expenditure to bolster the economy
- Supporting state banks in fortifying their core capital
- Enforcing essential reforms disclosed at the party plenum
- Enhancing efforts to attract foreign investments
- Enhancing the policy framework to support childbirth
- Expediting the issuance of special bonds by local governments
- Continuing the issuance of special treasury bonds next year
- Promoting sustained, stable, and healthy economic progress in 2024 and 2025
- Focusing on expanding domestic demand and prioritizing consumption
- Striving to invigorate capital markets
- Facilitating economic recovery efforts
