- China’s stock markets surged post-National Day break, driven by pent-up investor demand.
- Beijing’s aggressive stimulus measures have bolstered market sentiment, despite economic challenges.
- Investors are assessing further economic stimulus measures from Beijing.
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China’s stock markets surged on Tuesday on pent-up demand from a weeklong trading break.
The mainland’s benchmark CSI 300 index opened nearly 11% higher, but pared gains swiftly. The index was up 6.1% at midday.
Benchmark indices on the Shanghai and Shenzhen markets were also sharply higher.
Sentiment in China’s stock markets — which entered 2024 in meltdown mode — has been massively bolstered by Beijing’s September 24 announcement of aggressive stimulus to support its flagging economy. The CSI 300 is about 25% year-to-date.
China, the world’s second-largest economy, is dealing with multiple challenges, including a property crisis, deflation, and high youth unemployment.
Even before Tuesday’s opening, China’s social media was abuzz with what the stock markets may hold following the weeklong public holiday break.
On Tuesday, hashtags about mainland China’s stock market rushed to the top of Weibo’s trending list.
Investors were focused on announcements out of an ongoing press briefing by China’s top economic planner, the National Development and Reform Commission, for further cues on Tuesday.
Market expectations were high, but the commission did not announce fresh fiscal stimulus.
Tuesday’s stock volatility showed that China’s economic fundamentals haven’t caught up with market expectations, Hao Zhou, the chief economist of Guotai Junan International, told CNBC.
“The market was expecting too much from the government,” he said on Tuesday.
In Hong Kong, the Hang Seng Index slumped by as much as 10% before closing 5.6% lower at midday.
The index is still about 30% higher year-to-date following strong gains during China’s weeklong break.
This is a developing story. Please check back for updates.