The recent surge in Chinese stocks hit the pause button on Tuesday after the Chinese government failed to roll out another massive stimulus package, hoping to further fuel an unprecedented rally. It was a surprise to investors.
Hong Kong’s benchmark Hang Seng Index (^HSI), which includes many large-cap Chinese stocks, fell about 9% on Tuesday, the worst since October 2008, after rising about 20% last month on the back of rising Chinese stock prices. It was the day of Aggressive financial stimulus since the beginning of the pandemic.
China’s benchmark CSI 300 (000300.SS) also had a volatile day after the market reopened from the country’s week-long holiday, with hopes of a big stimulus announcement accelerating an initial 10% rise. It became. The index then gave up those gains and ended the day with a more modest 6% gain.
The stimulus package, China’s response to trying to get its sluggish economy back on track, was first announced on September 24. Since then, a surge in capital inflows has driven Chinese stocks, particularly in real estate and consumer staples, up dramatically as investors bet on a resurgence of the Chinese government. .
At a press conference on Tuesday hosted by China’s top economic planner, the National Development and Reform Commission (NDRC), the Chinese government announced further support to achieve its economic goals, including “an annual growth target of about 5%.” He said he is working hard to implement it. . ”
The Shanghai Composite (000888.SS) rose about 5% on Tuesday as well. The index rose by double digits and is up more than 20% from its September low. It has increased about 30% in the past month.
Similarly, shares of Chinese e-commerce giants such as Alibaba (BABA) and PDD Holdings (PDD) rose more than 35% and 55%, respectively, during the same period, despite single-digit losses on Tuesday.
Learn more about what this means for investors here.
