Chinese stocks extended their rally on Wednesday, driven by Beijing’s substantial monetary stimulus, though optimism in the broader Asia-Pacific region faltered. Hong Kong’s Hang Seng Index rose 0.7%, adding to Tuesday’s 4.1% surge, while China’s CSI 300 index gained 1.5% after a previous 4.3% jump. The People’s Bank of China, alongside other ministries, launched the largest stimulus package since the pandemic to support the struggling housing sector, stimulate lending, and bolster equity markets.
“The measures primarily focus on the stock market and property sector, though their impact on the real economy will take time,” commented Richard Hunter of Interactive Investor.
China’s construction-related commodities also surged, with iron ore futures reaching their highest price since early September. However, the initial enthusiasm began to wane as copper prices fell 1.2%, and Brent crude oil also dipped. Major Asian markets struggled to maintain gains, with Japan’s Nikkei, Australia’s S&P/ASX 200, and Singapore’s FTSE Straits Times Index all slipping.
Despite short-term support from China’s stimulus, Goldman Sachs analysts expressed concern over the property market’s continued drag on Chinese equities, suggesting that investors may view these stocks as a tactical trade rather than a long-term investment.
