Chinese shares soared to two-year highs on Tuesday as mainland markets reopened from a week-long holiday to a flurry of speculation of more stimulus from Beijing.
The blue-chip CSI300 was up 10 per cent in early trade to its highest since mid-2022, while the Shanghai Composite rose 9.7 per cent to hit its best level since December 2021.
The markets, however, gave up a chunk of the gains following announcements on new revival plans.
China’s state planner announced $28 billion for spending and investment projects on Tuesday and pledged to quicken fiscal support, expressing full confidence in achieving this year’s economic growth and development targets, Reuters reported.
Before entering the Golden Week holiday, Chinese stocks had already been on a tear, with Beijing announcing the most aggressive stimulus measures since the pandemic. China’s weighting in the MSCI EM Index rose from 24 per cent in August to 30 per cent now, and its continued outperformance may drive a self-reinforcing ‘pain-trade’ before the year-end, Bank of America analysts said in a note on Monday.
However, they said, the “buy everything stage will be over soon”, with market momentum, fiscal support, earnings, the US election and further policy settings all part of the outlook.
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