China’s markets reopen with a bang after a week-long hiatus By Reuters

SHANGHAI (Reuters) – Chinese shares climbed to two-year highs on Tuesday, pushing further into a soaring rally as trade resumed after a week-long holiday and investors bet on stimulus supporting the economy.

The blue-chip CSI300 rose 10% in early trade to its highest level since mid-2022 and rose 9.7% to hit its best levels since December 2021.

Hong Kong, which hit two-and-a-half-year highs on Monday, fell 2.8 percent. The yuan fell sharply to 7.0502 per dollar and five-year futures fell to their lowest level since July.

A press conference by the National Development and Reform Commission, which called for 0200 GMT, is in focus for more details on the stimulus commitments behind the market frenzy.

Before the break, China announced its most aggressive stimulus measures since the pandemic, and the CSI300 gained 25% in five sessions. Trading increased as heavy buying weighed on brokers and trading systems, and last Monday the CSI300 and Shanghai Composite posted their biggest gains since 2008.

Authorities have cut rates and hinted at fiscal support to prop up an economy that, by Chinese standards, is struggling.

Ahead of the Golden Week holiday, hedge fund manager David Tepper told CNBC that the moves were encouraging enough to buy “everything” in China.

But the gains have been so great that others are now urging caution.

“China’s weight in the MSCI EM index rose from 24% in August to 30% today, and its continued outperformance could lead to a self-reinforcing ‘sell-off’ before the end of the year,” Bank of America analysts said in a note about Monday.

However, they said, the “buy all” stage will end soon, with market momentum, fiscal support, earnings, the US election and other policy settings all part of the outlook.

“Consumer stocks, real estate (and) brokerages could be candidates for profit-taking … large-cap internet and high-yield state-owned enterprises are our preferred exposure,” they said.