China’s stock market saw gains on Monday for the fourth consecutive session, with the yield on the country’s 30-year treasury bond falling to a record low. This movement comes as speculation grows that Beijing may soon introduce new economic stimulus measures.
In Hong Kong, shares surged to a three-month high, driven by the U.S. rate-cutting cycle that began the previous week. However, these gains were short-lived, with the market pulling back in the afternoon.
Both of China’s main stock indices saw an increase, with the blue-chip CSI 300 index and the Shanghai Composite Index each rising by 0.4%. Meanwhile, Hong Kong’s Hang Seng Index closed flat after its earlier rally.
According to Yang Chao, an analyst at Galaxy Securities, the recent rate cuts in the U.S. could signal further easing by global central banks, which may ultimately provide a boost to Chinese exports throughout the year. He also noted that China’s A-shares are currently undervalued by historical standards, making them an attractive option for long-term investors.
While Chinese stocks stand to benefit from these developments, Hong Kong’s market is expected to feel a stronger impact due to its sensitivity to global capital flows. This is in contrast to the mainland, where regulators maintain tight controls on capital movement, according to a report from brokerage CICC.
On the bond market, the yield on China’s 30-year government bond fell to a historic low of 2.13%. This decline followed action from China’s central bank, which injected 14-day cash into the banking system at a reduced interest rate. The prospect of further stimulus measures was bolstered by the news that China’s top financial regulators, including the central bank, are set to hold a joint press conference on Tuesday.
Within the stock market, coal, energy, and banking sectors were the main drivers of gains in China. The Shenzhen index rose by 0.15%, though the ChiNext Composite index, which tracks smaller start-up companies, weakened by 0.397%.
In Hong Kong, the energy sector of the Hang Seng Index led with a 1.1% rise, while the IT sector saw a modest gain of 0.41%. The financial sector also performed well, finishing 0.45% higher, although the property sector dipped by 0.33%.
Elsewhere in the region, MSCI’s Asia ex-Japan stock index posted a gain of 0.29%, while Japan’s Nikkei index rose sharply, up 1.53%.
The continued rise in China’s stock market reflects growing optimism around potential economic stimulus, while the influence of U.S. rate cuts is likely to play a significant role in shaping market trends in Hong Kong and beyond. As these developments unfold, investors will be closely watching for any further announcements from Chinese regulators.
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