(Bloomberg) — Chinese stocks were volatile in early trading Monday as investors assessed the potential impact of support measures announced by the Treasury Department over the weekend.
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The CSI300 index fluctuated between a 1.7% rise and a 0.5% decline. Friday marked the worst week since late July. A Bloomberg Intelligence measure of Chinese developers was little changed after rising more than 4%.
The fluctuations underline caution as traders await further details on fiscal measures. Finance Minister Lan Foan promised new measures to support the real estate sector and signaled more government borrowing at a press conference on Saturday, but stopped short of giving a major dollar figure. Increased fiscal spending is seen as key to sustaining the stock market rally sparked by the central bank’s stimulus package in late September.
“There will be consolidation and a rebound,” said Wendy Liu, chief Asia and China equity strategist at JPMorgan Chase & Co. “Structural stimulus will be a positive in some ways for long-only investors who are considering investing in 2-3.” 2019 view. In the short term, it’s not very satisfying. ”
An index of Chinese stocks listed in Hong Kong fell more than 2%, reversing an earlier rally. Data on Sunday showed that China’s deflation problem became more entrenched in September, with consumer prices remaining weak and factory gate prices also continuing to fall.
Meanwhile, officials from various Chinese ministries met again on Monday to discuss strengthening policy support for businesses.
“With upside cap”
Lunn and his colleagues at a news conference Saturday said local governments would be allowed to use special bonds to buy unsold homes, although they did not specify the amount. Mr. Lunn hinted at room for more national debt, vowed to ease the debt burden on local governments and hinted at the possibility of rare budget revisions in the coming weeks.
Investors and analysts polled by Bloomberg said before the weekend that China would on Saturday release up to 2 trillion yuan ($283 billion) in new fiscal stimulus including subsidies, consumption vouchers and financial support for families raising children. I expected that.
Market volatility increased in the lead-up to the Treasury’s meeting, with the CSI300 index down 3.3% last week. As the rally stalls, there may be growing concerns that this rally will be another false dawn. Markets have been caught in start-stop cycles of gains and losses several times in the past, as the Chinese government’s gradual approach to stimulus only produced short-term rebounds.
the story continues
Investor Xin Yao Ng said, “The November US election and the FOMC could postpone the large-scale stimulus package until December or later, and investors are looking ahead to the results before that and in the third quarter. “There is a possibility that the market will shy away from the market, so the upside may be somewhat limited for now.” Director of abrdn Asia Ltd.
–With assistance from John Cheng.
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