Mainland Chinese shares had a topsy-turvy day of trading after returning from a weeklong break
Chinese stocks jumped in early trading as the mainland returned to work after a weeklong break to celebrate National Day. The CSI 300, which tracks the Shanghai and Shenzhen stock exchanges, was up 10.8% when markets opened. The Shanghai Stock Exchange Composite index jumped 10.2% and the Shenzhen Component Index rose 12.7%
However, the euphoria died down after the National Development and Reform Commission (NDRC)—China’s economic planning board—held its planned press conference to discuss Beijing’s stimulus measures. Prior to the holiday break, China’s central government unveiled stimulus measures aimed at jumpstarting a sluggish economy, and investors who were hoping for more stimulus at the NDRC event were probably left underwhelmed.
The chairman of the NDRC, Zheng Shanjie, said he was “fully confident” China would achieve its full-year economic and social goals. Beijing had set a target of 5% growth for this year, and in line with that goal, the NDRC said China will spend 200 billion yuan ($28.4 billion) on key investment projects this year—but held back on unleashing any more major stimulus during the press conference.
“The lack of details likely disappointed markets, with news reports of expectations of between 2 to 10 trillion yuan in new fiscal stimulus ahead of the event,” said Macquarie Group in a note published after the press conference.
Markets dipped as trading approached midday but started picking up again in the afternoon. However the Hang Seng Index, which tracks shares on the Hong Kong stock exchange, saw a continued sell-off with the index closing down by almost 10%. The Hong Kong stock exchange was only closed for the holiday on Oct. 1 and it has been rising since Beijing first announced stimulus measures in the last week of September, so investors may have been cashing out or reallocating their funds to mainland China.
Beyond the Hang Seng, mainland China’s shares closed higher. The CSI 300 closed up 6%, the Shanghai Stock Exchange Composite Index was up 4.6% and Shenzhen closed up by 9.2%.
Analysts have said previously that more fiscal support is needed for housing and social welfare spending, and that investor sentiment could turn negative without further stimulus
The NDRC reiterated Beijing’s messaging on the need to stabilize the real estate market, and also said policymakers will focus on increasing household incomes, and implement plans to boost domestic consumption, but did not give specific details.
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