Chinese stocks experienced a surge in early trading on Monday following promises from the finance ministry to introduce new measures to support the property sector and indicating potential government borrowing to boost the economy.
The CSI 300 Index saw an increase of 1.4% after ending the previous week with disappointing results, while a gauge of Chinese shares in Hong Kong also rebounded from an initial loss of 1.1%.
Investors are eagerly anticipating more detailed announcements regarding the nation’s fiscal plans in the upcoming days. There was some disappointment stemming from the lack of a specific dollar figure for fresh fiscal stimulus during the highly anticipated briefing on Saturday, as Finance Minister Lan Fo’an refrained from providing a headline number, which had been hoped for by the markets.
Despite the initial ambiguity, the commitment to fiscal deficit expansion is expected to stabilize market sentiment in the short term, particularly after the considerable volatility observed since late September. Analysts, such as Laura Wang from Morgan Stanley, see this as a positive step forward.
During the briefing, Lan and his team revealed that local governments will be permitted to utilize special bonds to purchase unsold homes, though they did not specify an exact amount. Lan also suggested the possibility of issuing more sovereign bonds and pledged to alleviate the debt burden of local governments, indicating a potential budget revision in the near future.
Before the weekend, expectations were high among investors and analysts surveyed by Bloomberg, who anticipated China to implement up to 2 trillion yuan ($283 billion) in fresh fiscal stimulus measures on Saturday. Potential measures included subsidies, consumption vouchers, and financial support for families with children.
Stay tuned for more updates on China’s fiscal policies as they develop.
Dive deeper into the world of finance and investing with Extreme Investor Network. Join us today to gain exclusive access to expert insights and strategies for maximizing your portfolio’s potential.