FT: Chinese stocks on track for best week since 2008 after stimulus blitz

Chinese equities surged this week following Beijing's announcement of a $114 billion stimulus package to support capital markets. The CSI 300 index gained nearly 15%, marking its best weekly performance since 2008. The People's Bank of China unveiled an Rmb800bn ($114bn) lending pool, sparking a rally in both domestic and Hong Kong stocks. Analysts are optimistic about sustained momentum, drawing parallels with the market's 2014-15 surge..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Arjun Neil Alim, Cheng Leng and William Sandlund in Hong Kong.Rally follows Beijing's pledge to support capital markets and economic growth targets .___STEADY_PAYWALL___.Chinese equities are on track for their best week since 2008 after Beijing launched an economic stimulus package including a $114bn war chest to boost the stock market..The CSI 300 index of Shanghai- and Shenzhen-listed companies is up almost 15 per cent for the week in its best performance since November 2008, when China announced a similar stimulus package in response to the global financial crisis..The rally comes as China's leadership rushes to support the country's capital markets, stabilise a property sector crisis and boost domestic consumption in order to meet its economic growth target of 5 per cent for the year..On Tuesday, the People's Bank of China unveiled an Rmb800bn ($114bn) lending pool for the country's capital markets, comprising funds to lend to companies to buy back their own shares and to lend to non-bank financial institutions such as insurers to buy local equities..The CSI 300 index climbed 3.8 per cent on Friday while Hong Kong's Hang Seng index rose 2.8 per cent, up over 12 per cent since the start of the week in its best weekly gain since August 2007, when it hit record highs just prior to the global financial crisis..Read more: 🔒 FT – Naspers/Prosus alert: Are Chinese stocks a value trade or a value trap?."We are at a pivotal moment for the Chinese economy and its equities market," said Nicholas Yeo, head of China equities at Abrdn, who said in a note that the US Federal Reserve's recent interest rate cut would also be a significant tailwind.."Global easing conditions are poised to bolster consumption, which is a boon for China, the world's largest exporter," he said..Hopes for more stimulus in China have also buoyed European stocks. The region-wide Stoxx 600 closed at a record high on Thursday pushed higher by luxury groups that would benefit from stronger consumer spending in China..The China rally followed Wall Street gains after the S&P 500 closed on Thursday at a record high for the third time this week, with equities climbing ahead of Friday's inflation report..Chinese authorities in August restricted the daily northbound data through the Hong Kong Stock Connect programme that shows foreign investor flows into mainland stocks..But Citi said the past three days were "the busiest period for Citi's equities sales and trading team in the Asia region, with record client flows" into Hong Kong and mainland Chinese equities..The Shanghai Stock Exchange put out a notice on Friday warning investors of "abnormally" slow transaction speeds as a result of frenzied morning trading, said two people familiar with the situation.."We can't dismiss this as the same old policy," said Winnie Wu, equity strategist at Bank of America. "This is the first time that the government is encouraging leveraged investment in the stock market. A liquidity-leveraged rally should still have significant room to go.".David Chao, a global market strategist at Invesco, said the rally in Chinese stocks could be sustained. "China markets are about momentum, and I see certain parallels between the existing rally and that of the 2014-15 rally," when Shanghai's index rose about 150 per cent between June 2014 and June 2015 but then collapsed..Chao added that as the dollar continued to weaken on the back of interest rate cuts from the Federal Reserve, he predicted "possible rotation out of the expensive and crowded global tech trade into cheaper [emerging market] assets"..Read also:.🔒 China offloads record $42.6bn in US stocks and bonds amid rising tensions2024's first trading day sees historic drop in stocks and bondsGood news for Naspers/Prosus – Chinese market Bears turn Bullish on bargain valuations.© 2024 The Financial Times Ltd.

FT: Chinese stocks on track for best week since 2008 after stimulus blitz

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