Chinese stocks set for best month in nearly a decade on stimulus Reuters

SHANGHAI/SINGAPORE (Reuters) – Chinese stocks extended a sharp rally on Monday, with the mainland heading for their best month in nearly a decade, as Beijing rolled out fresh stimulus measures to stem a broader economic slowdown .

Benchmark indices in mainland China started the week on a strong footing after posting their best weekly performance in nearly 16 years on Friday, with the blue-chip CSI300 index up more than 6.22%.

The value rose 5.7%, while Hong Kong’s rose 3.34%.

Shares in real estate companies rose sharply in response to China’s central bank saying late on Sunday it would tell banks to cut mortgage rates on existing home loans before Oct. 31 as part of sweeping policies to support the country’s beleaguered housing market. .

Adding to efforts to reverse the property decline, the city of Guangzhou announced on the same day the lifting of all restrictions on home purchases, while Shanghai and Shenzhen eased purchase restrictions.

“The market is still surprised by China’s policy support and the momentum continues,” said Kenny Ng, strategist at China Everbright (OTC:) Securities International in Hong Kong.

Listed property stocks on the mainland rose 6.4%, while the Hang Seng Mainland Property Index saw an 8.4% increase.

Consumer staples stocks last traded 7% higher. The smaller Shenzhen index rose 8.2%.

For the month, the CSI300 index was eyeing a gain of more than 18%, its best performance since December 2014. The Shanghai Composite Index was similarly on track to end September with a 14.8% gain, its biggest from April 2015.

The Hang Seng Index was set for its best month since November 2022, up 14.7%.

“A coordinated blitz of stimulus suggests China has reached a ‘whatever it takes’ moment, with economic risks reaching Beijing’s painful threshold,” said Eli Lee, chief investment strategist at Bank of Singapore.

“Beyond a short-term rebound, although it is now premature to assess at this point, we cannot rule out that this could be the start of a sustained market if Beijing provides significant enough stimulus to successfully generate a turnaround in macro fundamentals “.

Sunday’s developments were the latest in a series of aggressive stimulus measures announced by Beijing last week – from big interest rate cuts to fiscal support – in a bid to shore up its ailing economy.

That lit a fire under battered Chinese stocks, which hovered near multi-year lows earlier this month as investors worried about China’s growth prospects.

Notably in a boost to equities, the People’s Bank of China (PBOC) also introduced two new tools to boost the capital market, one of which includes a swap program that allows funds, insurers and brokers easier access to funding for to buy shares.

The CSI300 rose nearly 16 percent last week following the announcements, and the broader Shanghai Composite rose nearly 13 percent, both posting their biggest weekly gains since November 2008. The Hang Seng also posted its biggest the largest weekly increase since 1998 and the fifth largest in half a century. (This story has been corrected to remove “Hong Kong” from paragraph 2)