China shares rise to 2-year highs on stimulus hopes By Reuters

(Reuters) – Chinese shares rose to two-year highs on Tuesday as mainland markets reopened from a week-long holiday on a flurry of speculation about more stimulus from Beijing.

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

China’s state planner on Tuesday announced $28 billion in spending and investment projects and pledged to step up fiscal support, expressing full confidence in achieving this year’s economic growth and development targets.

Before entering the Golden Week holiday, Chinese stocks were already on a tear, with Beijing announcing its most aggressive stimulus measures since the pandemic.

COMMENTS:

RONG REN GOH, PORTFOLIO MANAGER, EASTSPRING INVESTMENTS, SINGAPORE

“Markets were hoping for guidance on the size of the fiscal stimulus at this presser – but without the Treasury present, that information was unlikely to be provided. Market estimates of the stimulus ranged from CNY 2 trillion – CNY 10 trillion. A number closer to 10 was needed to support increased risk.

“The NDRC chairman recapped key announcements and commitments without new information – disappointing markets.

“What’s next? No major press conference has been held so far. Thus, we may see the markets consolidating and digesting what has already been announced, which is undoubtedly significant, but not enough to satisfy high expectations.”

MATT SIMPSON, SENIOR MARKET ANALYST, CITY INDEX, BRISBANE

“We are witnessing a shake-up at the height of a very strong rally. But when we get to the point where it hurts my neck to watch it, you could argue that a retreat is overdue.

“In any case, it appears that some are taking profits after the exceptional gains in the gold week, and this could discourage others from stepping in simply to support the market immediately. And that paves the way for a share around the top, if not a deeper pullback for China markets.”

ROB CARNELL, ING REGIONAL HEAD OF RESEARCH FOR ASIA PACIFIC, SINGAPORE

“I think there’s a lot of expectation for a bit more meat on the bones of the physical stimulus that’s been talked about a little bit recently … we’re talking about consumer vouchers, maybe more investment in infrastructure spending. So I think there’s kind of an expectation that the Positive Stimulus Message, which came down really well just before the holidays, will have some additional additions to this press conference today, Hong Kong has opened up a little bit more, probably it is more in sync with global equity markets.

VASU MENON, MANAGING DIRECTOR, INVESTMENT STRATEGY, OCBC, SINGAPORE

“Today’s strong performance is not a big surprise as Chinese stocks are likely catching up after both Hong Kong’s Tech Index and the US Golden Dragon Index rose more than 10% in the first week of October as markets Chinese. were closed for the Golden Week holidays.

“There are still no clear signs that the Chinese economy is recovering, so this increase is largely driven by sentiment and triggered by Beijing’s onslaught of stimulus at the end of September. Chinese policymakers are also expected to announce new measures to boost economic growth today and in the coming weeks and hopes of further stimulus have also boosted sentiment and contributed to the current market rally.

“Ultimately, for the rally to be sustainable, we need to see more fiscal policy and more measures to support the economy and housing market. Great hope has been built in the strong growth in recent weeks and we now need to see more government policy action to support the upward trend.”

GARY NG, SENIOR ECONOMIST, NATIXIS, HONG KONG

“I think today’s move just explains that in the Chinese onshore market, it’s just rising to a level that investors are comfortable with.

“Because nobody’s really sure what’s going on under the stimulus … there could be a little bit of uncertainty about whether it’s above or below market expectations.”

JUN RONG YEAP, MARKET STRATEGIST, IG, SINGAPORE

“Mainland Chinese stocks are largely recovering after being off the Golden Week holiday over the past week. Optimism about recent stimulus efforts remains in play, although today’s upcoming policy press conference will be closely watched for potential fiscal outcomes.”

CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE

“So far, the NDRC press conference seems to have no details on the stimulus measures. Hopes were raised, but the delivery was disappointing. The post-open rally in Chinese stocks is gone and the lack of follow-through is a setback for sentiment.”