Blue-chip CSI300 index gained nearly 3%, partially reversing the previous day’s 7% and Hang Seng soared more than 4%, after sliding 1.3% on Wednesday
Chinese stocks resumed their rally on Thursday, fanned by expectations a briefing from finance officials this weekend would deliver expected fiscal stimulus, while the dollar stayed near a two-month high before a U.S. inflation report.
Mainland shares got a lift early in the Asia session as China’s central bank commenced its 500 billion yuan facility to spur capital markets, a plan it announced late September as part of a series of stimulus measures.
Blue-chip CSI300 index gained nearly 3%, partially reversing the previous day’s 7%, which was triggered by some investor concern about the lack of details in the stimulus package. Hong Kong’s Hang Seng soared more than 4%, after sliding 1.3% on Wednesday and is 26% higher this year.
That left MSCI’s broadest index of Asia-Pacific shares outside Japan up 1.25%, with futures suggesting European bourses were due for a marginally higher open.
The market’s attention is now firmly on a finance ministry press conference on Saturday that will provide details of the fiscal stimulus plan.
We believe the consensus is expecting nearly 2 trillion to 3 trillion yuan in size of fiscal stimulus measures, said Richard Tang, China strategist at Julius Baer.
Tang expects more announcements of additional fiscal measures in the coming weeks.
It’s been a volatile week for Chinese markets.
Mainland shares rallied to two-year highs on Tuesday after the long National Day holiday but quickly lost steam as the lack of details on stimulus measures dealt a blow to market enthusiasm.
Benchmark indexes in China notched their biggest daily losses on Wednesday since the pandemic began.
Overall, the CSI300 index is 26% higher and the Shanghai Composite index is up 22% since the measures were first announced on September 24.
We believe the recent policy pivot marks a step change in the level of policy support, and that meaningful fiscal support is likely to follow, according to Nicholas Yeo, head of China equities at abrdn.
For the rally to sustain, the government needs to deliver on fiscal stimulus, Yeo said.