Chinese stocks experienced a remarkable surge, marking their largest single-day gains in 16 years, driven by new stimulus measures from Beijing. The domestic A-shares reached record turnover as investors rushed to capitalise on the ongoing rally. The CSI300 blue-chip index rose almost 30% from its February low, entering what could be considered a bull market. These rapid gains, largely concentrated over a few recent sessions, were partly due to traders wanting to get ahead of the upcoming week-long holiday.
The CSI300 index closed up 8.5%, with a five-day gain of over 25%, its strongest on record. Meanwhile, the broader Shanghai Composite Index jumped 8.1% with a turnover of 1.17 trillion yuan. Since Beijing began implementing stimulus measures last Tuesday, the Shanghai index’s five-day gain has been the most significant since 1996, climbing by 21.4%. The Shenzhen index also soared by 11% with a 1.4 trillion yuan turnover. These gains marked the best single-day percentage increases for all three indices since 2008.
This rally followed aggressive stimulus efforts by Beijing, including major rate cuts and fiscal support aimed at revitalising the economy. The People’s Bank of China introduced two new tools, including a swap programme that makes it easier for financial institutions to access funding for buying stocks. These policies sparked renewed interest in Chinese equities, which had been struggling near multi-year lows due to concerns about the country’s economic growth.
Dickie Wong, executive director of research at Kingston Securities, commented on the unprecedented clarity and intensity of these measures, emphasising support for the housing market and stock investments. He noted that both foreign and local investors were eager not to miss out on the rally, pushing the Hang Seng Index up to 21,000. The Hang Seng Index gained 2.4% on Monday, making it the best-performing stock market in Asia, with a year-to-date rise of around 24%.
Further positive news came as China’s central bank announced plans to lower mortgage rates for existing home loans by October 31, and cities like Guangzhou lifted restrictions on home purchases, while Shanghai and Shenzhen eased theirs. This drove property shares higher, with mainland-listed property stocks climbing by 8.2% and the Hang Seng Mainland Properties Index rising by 6.4%. Investor optimism around stimulus measures also boosted consumer staples, which saw an 8.8% increase—their biggest in 16 years.
For September, the CSI300 index recorded a 21% increase, its best since 2014, while the Shanghai Composite Index gained 17%, its largest rise since 2015. The Hang Seng Index enjoyed its strongest month since late 2022, with a 17% gain, and experienced its biggest weekly increase since 1998 last week. Mainland financial markets will be closed for the National Day holidays from October 1 to 7.
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