Hong Kong and Chinese Stocks Surge on Stimulus Measures

_{^{[Source – markets.com]}}

Chinese Stocks are on track for their best weekly performance in nearly 16 years, as the mainland’s CSI 300 index is poised for a remarkable 15% rally this week. This surge is fueled by the central bank’s recent announcement of economic stimulus measures. The last time the index experienced a larger weekly gain was the week ending November 14, 2008.

Hong Kong’s Strong Performance

Meanwhile, Hong Kong’s Hang Seng index is set to record a weekly gain of 12.85%, marking its strongest performance since February 1998, according to data from FactSet. On Friday, the CSI 300 climbed almost 4%, while the Hang Seng Index rose by 3.5%. These gains came in the wake of the People’s Bank of China (PBOC) cutting its 7-day reverse repurchase rate from 1.7% to 1.5%, as well as reducing the reserve requirement ratio for financial institutions by 0.5 percentage points.

The PBOC stated that the reserve requirement ratio cut aims to foster a favorable monetary and financial environment for stable economic growth and high-quality development in China.

Industrial Profit Data Raises Concerns

Despite the positive market reactions, Chinese stocks also released industrial profit data for August, revealing a significant year-on-year decline of 17.8%. This drop follows a 4.1% year-on-year increase in July, which was the fastest pace in five months. For the year to date, profits at large industrial firms have grown by only 0.5%, totaling 4.65 trillion yuan (approximately $663.47 billion) for the first eight months, compared to a 3.6% increase in the first seven months.

Given that this data only extends through August, investors will need to wait for the next round of figures to evaluate the full impact of the stimulus measures announced earlier this week.

Performance of Regional Markets

In other Asian markets, Japan’s Nikkei 225 index rose by 0.81%, while the broader Topix index experienced a slight decline of 0.18% following the announcement of the Consumer Price Index (CPI) reading. South Korea’s Kospi fell by 0.21%, and the small-cap Kosdaq dropped 0.27%. Meanwhile, Australia’s S&P/ASX 200 edged up by 0.10%, coming within about 30 points of its all-time high of 8,246.2.

U.S. Markets Continue to Climb

Overnight in the United States, all three major stock indexes reported gains, with the S&P 500 reaching a new record high after the release of positive economic data. The broad market index increased by 0.40%, closing at 5,745.37, driven by strong performances from companies like Micron Technology. The Nasdaq Composite rose by 0.60%, while the Dow Jones Industrial Average gained 0.62%.

China’s Stimulus Plan Boosts Global Markets

A fresh wave of U.S. economic data also contributed to the upward momentum in the markets. Weekly jobless claims fell more than anticipated, signaling a steady labor market. Additionally, the final reading of the U.S. second-quarter GDP remained unchanged at a robust 3%, further supporting market gains.

Conclusion

As Hong Kong and Chinese Stocks enjoy significant gains this week, driven by new stimulus measures, the focus remains on how upcoming economic data will reflect the effectiveness of these initiatives. Investors are closely monitoring both regional and global markets as they respond to shifting economic landscapes.