Chinese stocks experienced their most significant single-day rally in 16 years on Monday, driven by a wave of stimulus measures from the government aimed at bolstering the struggling economy, Reuters reports.
The CSI300 blue-chip index surged by 8.5%, closing nearly 30% higher than its February lows, indicating a potential shift into a bull market, although most of this growth occurred rapidly over just a few sessions.
The trading day set records, with the Shanghai Composite Index recording a total turnover of 1.17 trillion yuan (approximately $166.84 billion) and rising 8.1%. This marked a five-day gain of 21.4%, the largest since 1996. Similarly, the smaller Shenzhen index saw an impressive increase of 11%, with a turnover of 1.4 trillion yuan.
This rally followed the announcement of aggressive stimulus measures by Beijing, which included substantial interest rate cuts and fiscal support, designed to address the ongoing economic slowdown. Among the new initiatives, the People’s Bank of China (PBOC) introduced two financial tools aimed at providing easier funding access for market participants, enabling funds, insurers, and brokers to invest in stocks more readily.
The substantial market response reflects a significant turnaround in investor sentiment. Dickie Wong, executive director of research at Kingston Securities, noted the intensity of the new policies, emphasizing that this was the clearest directive yet to stabilize housing prices and support the stock market. Many investors, both domestic and foreign, expressed concerns about missing out on potential gains, contributing to the rapid influx of capital into the market.
In Hong Kong, the Hang Seng Index rose by 2.4%, bringing its year-to-date increase to roughly 24%, making it Asia’s best-performing stock market. This surge was further fueled by the central bank’s announcement that banks would be required to reduce mortgage rates for existing home loans before October 31, along with Guangzhou’s decision to lift all restrictions on home purchases and similar easing of measures in Shanghai and Shenzhen.
The positive developments in the property sector significantly boosted related stocks, with mainland property shares climbing 8.2% and the Hang Seng Mainland Properties Index rising 6.4%. Investor optimism regarding a revival in domestic consumption also contributed to the day’s gains, with shares of consumer staples rising by 8.8%, marking their most significant daily increase in 16 years.
Overall, the CSI300 index recorded a 21% gain for September, its strongest performance since December 2014, while the Shanghai Composite Index saw a 17% increase, the highest since April 2015. The Hang Seng Index also concluded the month with a 17% rise, marking its best performance since November 2022. As mainland financial markets prepare to close for the National Day holidays from October 1 to 7, the future trajectory of the stock market remains a topic of keen interest among investors.
