China’s stock markets saw a positive trend on Monday, as traders prepared for an eventful week. With a US election looming, potential changes in interest rates, and a significant policy meeting set to take place in China, both local and global investors held their breath for impactful shifts.
The Shanghai Composite index climbed by 1.2% to close at 3,310.21, while the blue-chip CSI300 index finished 1.4% higher. Within this rise, the financial sector surged 1.8%, and consumer staples increased by 1%. In Hong Kong, the Hang Seng index gained a modest 0.3%, closing at 20,567.52, although trading volumes dropped sharply, indicating a cautious approach by investors.
Automotive giant BYD saw its shares jump by 4.4% following strong sales figures, boosting related sectors, including renewables and other tariff-sensitive industries. Travel company Trip.com also performed well, becoming the day’s top gainer with a 4.7% increase. Conversely, the property sector experienced a slight pullback, dipping by 0.8% as some traders engaged in profit-taking.
In the United States, recent polling data revealed Kamala Harris leading in Iowa, which led betting markets to reassess Donald Trump’s prospects in the upcoming election. This shift in sentiment raised concerns in Hong Kong, as investors weighed the potential for renewed tariffs should Trump emerge victorious. Reflecting the apprehension, the one-week implied volatility for the dollar/yuan pair spiked to a record level on Monday.
October proved challenging for Chinese equities, as hedge funds engaged in record levels of net selling, according to Goldman Sachs prime brokerage, cashing in on gains accumulated in August. Trading volumes also reflected the active market conditions: approximately 66.5 billion shares exchanged hands on the Shanghai exchange, exceeding the 30-day moving average, while 2.46 billion Hang Seng index shares traded, around half the average for that market.
Meanwhile, the Chinese government’s Standing Committee of the National People’s Congress is expected to finalise new spending and debt refinancing plans aimed at supporting local governments and bolstering economic growth during their meetings this week. Across the Pacific, the Federal Reserve appears poised to announce a 25 basis-point reduction in short-term borrowing rates at its November 7 meeting, marking another key development for global markets.
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