China Stocks Poised for Best Month in Nearly a Decade Amid Stimulus Optimism, Reuters Reports

Chinese Stocks Continue Strong Rally Amid Stimulus Efforts

Chinese stocks have experienced a significant surge on Monday, positioning mainland shares for their most impressive month in nearly a decade. This upswing follows Beijing’s introduction of additional stimulus measures aimed at countering the economic slowdown.

Mainland benchmark indexes kicked off the week robustly, following their strongest weekly performance in almost 16 years. The CSI300 blue-chip index rose by over 6.22% during this period.

Property companies saw sharp gains after the People’s Bank of China announced that it would instruct banks to lower mortgage rates for existing home loans before October 31, as part of broader strategies to support the struggling property market.

In line with these efforts, Guangzhou city revealed that it would lift all restrictions on home purchases, while Shanghai and Shenzhen also relaxed their buying limits.

"The market remains positively surprised by China’s policy support, and the positive momentum is still rolling," commented Kenny Ng, a strategist at China Everbright Securities International in Hong Kong.

Mainland-listed property stocks surged by 6.4%, while the Hang Seng Mainland Properties Index climbed by 8.4%. Shares of consumer staples experienced a 7% increase, and the smaller Shenzhen index soared by 8.2%.

Looking at the monthly performance, the CSI300 index is poised to achieve a gain of over 18%, marking its best performance since December 2014. Similarly, the Shanghai Composite Index is on track for a 14.8% rise, its strongest since April 2015. The Hang Seng Index is also expected to finish the month with a 14.7% increase, its best since November 2022.

Eli Lee, chief investment strategist at Bank of Singapore, remarked, "A coordinated stimulus blitz indicates that China has reached a ‘whatever it takes’ moment as economic challenges reach a critical point for Beijing." He added, "Although it is early to assess the situation, we cannot discount the possibility that this could mark the beginning of a sustainable bull market if Beijing implements significant stimulus to effectively improve macroeconomic fundamentals."

The latest announcements from Beijing are part of a series of aggressive stimulus measures, including substantial rate cuts and fiscal support, aimed at stabilizing the ailing economy. This has invigorated Chinese equities that had been languishing near multi-year lows, raising concerns among investors regarding China’s growth prospects.

Furthermore, the People’s Bank of China has introduced two new initiatives to enhance the capital market, including a swap program to facilitate easier funding access for funds, insurers, and brokers for stock purchases.

Last week, the CSI300 index surged nearly 16%, while the broader Shanghai Composite jumped almost 13%, recording their largest weekly gains since November 2008. The Hang Seng Index also marked its most substantial weekly rise since 1998, making it the fifth largest in the past 50 years.