China ADRs, Miners, Casino Stocks Surge as Beijing Introduces New Stimulus Measures – Reuters

By Lisa Pauline Mattackal and Nikhil Sharma

U.S.-listed shares of Chinese companies experienced significant gains on Tuesday, along with exchange-traded funds focused on China, casino stocks, and commodities-linked shares. This surge followed Beijing’s announcement of its largest stimulus measures since the pandemic, igniting optimism for renewed economic growth.

The People’s Bank of China introduced a series of policy enhancements, including interest rate cuts and reductions in mortgage rates, alongside new mechanisms to improve capital market funding. These initiatives aim to stimulate demand in the world’s second-largest economy.

E-commerce giants such as Alibaba Group, JD.com, and PDD Holdings were among the leading gainers on Wall Street, with stock prices increasing between 5.4% and 8%. Chinese automotive manufacturers, including Nio and Li Auto, also saw their shares rise by approximately 7%, while Tencent Music Entertainment Group’s stock soared by 14%.

Mining stocks rallied as metal prices increased on the expectation of higher demand. The materials sector climbed 1% to a record high, with Freeport-McMoRan’s stock gaining over 6%, leading the S&P 500.

Casino operators Wynn Resorts and Las Vegas Sands, both heavily invested in Macau, reported stock increases of 4% and 5.6%, respectively. Likewise, Estee Lauder’s shares rose by 5.6%, reflecting hopes for a rebound in luxury consumer demand in the crucial Chinese market.

Exchange-traded funds that track Chinese markets also saw a positive impact, with one ETF rising 6.4% following the CSI300 index posting its best performance in four years. Another ETF, focused on Chinese internet companies, jumped nearly 7%, reaching over a two-month high.

Investors have shown hesitancy towards Chinese assets throughout the year due to sluggish growth, weak consumer demand, a severe decline in the property market, and potential renewed trade tensions with the United States. The CSI300 index has fallen more than 2% year-to-date, in contrast to a 15.8% increase in global stocks.

“If investors are seeking opportunities, they might consider taking a chance on Chinese stocks, as they have been significantly undervalued. This situation may present a good short-term investment opportunity,” remarked Jay Woods, chief global strategist at Freedom Capital Markets.

Despite recent measures, uncertainty persists regarding the adequacy of these stimulus actions to foment growth, leading several analysts to anticipate that policymakers will need to take further action. Global brokerages, including Goldman Sachs and Citigroup, downgraded their 2024 growth forecasts for China, with Citigroup highlighting the need for additional fiscal stimulus.

Some experts believe that the current measures indicate a beginning rather than an end to stimulus efforts. “This is likely much closer to the start of new stimulus measures than their conclusion,” stated Colin Cieszynski, chief market strategist at SIA Wealth Management.