Stimulus Boost Leads Chinese Stocks Toward Best Monthly Gains in Nearly a Decade

Via Syndicated Feed

Chinese stocks continued their remarkable rally on Monday, a significant event that saw mainland shares on track for their best month in nearly a decade. This surge, fueled by Beijing's additional stimulus measures, is a clear indication of the market's response to combat a slowdown in the overall economy. 
Benchmark indexes in mainland China kicked off the week strongly, following their best weekly performance in almost 16 years recorded on Friday, with the CSI300 blue-chip index rising by over 6.22%.
The Shanghai Composite Index surged by 5.7%, while Hong Kong's Hang Seng Index increased by 3.34%. 
The real estate company shares saw significant gains following an announcement from China's central bank on Sunday, indicating that it would instruct banks to reduce mortgage rates for existing home loans before October 31 to support the struggling property market. To further combat the downturn in the property sector, Guangzhou city also announced the removal of all restrictions on home purchases, while Shanghai and Shenzhen relaxed their buying restrictions.
The market is still surprised by China's policy support, and momentum is continuing, stated Kenny Ng, a strategist at China Everbright Securities International in Hong Kong.
Mainland-listed property stocks increased by 6.4%, while the Hang Seng Mainland Properties Index surged by 8.4%. Shares of consumer staples saw a rise of 7%, and the smaller Shenzhen index soared by 8.2%.
For the month, the CSI300 index is on track to achieve a gain of over 18%, marking its best performance since December 2014. Likewise, the Shanghai Composite Index is poised to finish September with a 14.8% increase, its highest since April 2015. The Hang Seng Index is also set for its best month since November 2022, showing a rise of 14.7%. 
Eli Lee, chief investment strategist at the Bank of Singapore, remarked that a coordinated stimulus effort indicates that China has reached a 'whatever it takes' moment as economic risks have hit Beijing's pain threshold.
While it is still too early to determine the long-term impact, we cannot dismiss the possibility that this could mark the beginning of a sustainable bull market if Beijing implements sufficiently large stimulus measures to drive a turnaround in macroeconomic fundamentals effectively, stated analysts, instilling a sense of hope in the market's future.
Sunday's events were part of a series of aggressive stimulus actions announced by Beijing last week, including significant rate cuts and fiscal support to stabilize its struggling economy. These measures sparked renewed interest in Chinese equities, trading near multi-year lows earlier this month amid concerns over China's growth prospects. 
Conversely, the People's Bank of China (PBoC) notably contributed to the stock market by introducing two new tools designed to strengthen the capital market. One of these tools is a swap program that enables funds, insurers, and brokers to access financing more easily for stock purchases. Following these announcements, the CSI300 index surged nearly 16% last week, while the broader Shanghai Composite Index jumped almost 13%, achieving their most significant weekly gains since November 2008. The Hang Seng Index recorded its most considerable weekly increase since 1998 and its fifth most important in the past 50 years.
With reporting by the Reuters
IndraStra Global Staff has not edited this story, which is auto-generated from a syndicated feed.

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