China plays perilous game of pump the stock market
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Hudson Lockett
HONG KONG, Sept 30 (Reuters Breakingviews) -Beijing has reset the narrative - for now. The government's most recent measures to try to bolster the housing and consumer markets have sparked a rally in the country's biggest and most liquid listings, onshore and offshore.The CSI 300 Index .CSI300 of Shanghai- and Shenzhen-listed stocks surged more than 8% on Monday to clock a 27% jump from its low in mid-September. The risk is that when policymakers flesh out their plans, they will leave investors disappointed.
The latest measures announced range from major cities undoing home-purchase restrictions, to the central bank letting borrowers renegotiate mortgages, to the government trying to jump-start consumer spending.
Markets are pricing in gains that suggest officials will be successful. The rally in China’s biggest and most liquid listings has been outstripped by that of consumer stocks, which have in turn been outdone by rising prices for shares in developers: the MSCI China Real Estate index jumped by about a third over the course of last week.
Some of those gains simply reflect the low starting point for Chinese shares. Prior to the recent slew of announcements, Kweichow Moutai's 600519.SS stock had fallen by roughly a quarter in 2024 despite decent results and a share buyback plan of up to 6 billion yuan ($856 million). The world’s biggest spirits maker is now up almost 8% this year.
Hong Kong-listed Country Garden Services 6098.HK, meanwhile, has risen almost 60% from its recent low on Sept. 16; that's far more speculative, as the property management company's eponymous former parent about a year ago missed a bond payment that helped precipitate a near-total reversal of foreign inflows to Chinese stocks by the end of 2023.
It's difficult to track whether foreign funds are now diving back in because Beijing ended daily readouts of the relevant data in August. After so many false starts, global investors remain reticent, with analysts at Morgan Stanley describing further expected gains as a “tactical rally”.
It could be that hope for yet more stimulus is driving stocks up. It is also possible that government-backed buyers have entered the fray, snapping up shares to boost sentiment ahead of the days-long National Day holiday this week during which mainland markets are closed.
The real test will come when Beijing releases the details for the various support measures it has announced. That will reveal whether investors have called the market right - or whether they're due yet another reality check.
Follow @KangHexin on X
CONTEXT NEWS
China’s CSI 300 Index jumped more than 8% on Sept. 30. It has now risen more than 27% from a low touched on Sept. 13, with consumer stocks following property developers higher amid a growing raft of support measures from the central government. The latest increases follow a rally since Sept. 23 that is the biggest weekly gain since 2008.
The megacities of Shanghai, Shenzhen and Guangzhou on Aug. 29 removed restrictions on homebuyer eligibility while the People’s Bank of China announced homeowners will be able to renegotiate mortgage terms with lenders from Nov. 1.
Graphic: Property and consumer sectors drive China stock rally https://reut.rs/4etHFFB
Editing by Antony Currie and Aditya Srivastav
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
