Chinese stocks post best week since 2008 after stimulus blitz

Chinese stocks have experienced their strongest week since 2008, surging after Beijing announced a substantial economic stimulus package aimed at revitalizing the economy and supporting capital markets.

The CSI 300 index, which includes shares from Shanghai and Shenzhen, rose by 15.7 per cent for the week—the best performance since November 2008 when China launched a similar initiative in response to the global financial crisis, Caliber.Az reports via foreign media.

This rally not only boosted Chinese equities but also positively impacted European markets and industrial metal prices. The Chinese government is striving to stabilize its property sector crisis and enhance domestic consumption to achieve its 5 per cent economic growth target for the year. Key to this effort was the People’s Bank of China's unveiling of an Rmb800 billion ($114 billion) lending pool to assist companies in stock buybacks and support non-bank financial institutions in purchasing local equities.

On September 27, the CSI 300 index climbed 4.5 per cent, while Hong Kong's Hang Seng index increased by 3.6 per cent, marking a total rise of 13 per cent since the start of the week—its largest weekly gain since the Asian financial crisis in 1998. Market experts, like Nicholas Yeo from Abrdn, emphasize that this moment is critical for the Chinese economy and equity markets, especially following recent interest rate cuts by the US Federal Reserve, which may foster global consumption.

The enthusiasm for Chinese stocks also influenced European markets, pushing the Stoxx 600 to a new record high, buoyed by luxury goods companies benefiting from increased Chinese consumer spending. Despite restrictions on northbound investments through the Hong Kong Stock Connect, recent trading activity has surged, reflecting strong foreign interest in Chinese equities.

The stimulus measures have also driven up most commodity prices, particularly industrial metals like copper, aluminum, and zinc, which are crucial for China's manufacturing sector. Copper prices have risen over 5 per cent since September 24, surpassing the $10,000 per tonne mark.

Conversely, oil prices remain subdued amid reports of Saudi Arabia increasing production. Analysts suggest that this commodity price surge signals a broader reflation trend, though its potential impact on consumer sentiment remains to be seen.

By Vafa Guliyeva