SHANGHAI, Sept 27 — China and Hong Kong stocks are on track for their best weekly performances in 16 years, as Beijing rolled out its most aggressive stimulus package since the pandemic this week ahead of the Golden Week holidays.
China's blue-chip CSI300 and benchmark Shanghai Composite indexes have so far gained 15 per cent and 12 per cent, respectively, for the week, set for the strongest weekly performances since late 2008. Hong Kong's Hang Seng index has also added nearly 13 per cent.
"At face value, all measures announced this week signal that the urgency of policy response is not lost on authorities — an important shift in a market that was looking for more than just the bare minimum," Barclays analysts said.
"But in a scenario that would have more far-reaching effects on global assets, perhaps this week signals that China is looking to repair its national balance sheet structurally," they added.
China's central bank said on Friday it would cut the amount of cash that banks must hold as reserves by 50 basis points and lower the borrowing cost of its seven-day reverse repurchase agreements by 20 basis points, part of efforts flagged on Tuesday aiming to get the ailing economy back on more solid footing.
The CSI300 index and Shanghai Composite index rose 3.8 per cent and 2.1 per cent, respectively.
China's property shares extended gains on Friday, jumping 7.8 per cent on a pledge from the September meeting of top Communist Party officials, the Politburo, to stabilise the housing market.
"Despite the lack of details on the plan to halt property declines, we believe the most effective way to achieve this is for Beijing to serve as the builder of last resort by directly providing funding to those delayed residential projects that have been pre-sold," said Ting Lu, chief China economist at Nomura.
Consumer sentiment was also lifted as reflected in a 7.2 per cent jump in consumer staple shares. Shares of liquor giant Moutai rose 4.7 per cent.
Hong Kong's Hang Seng index was up 3.5 per cent, led by tech shares, which surged 6.6 per cent on Friday.
JD.com and Meituan shares both climbed more than 10 per cent.
Reuters reported on Thursday that China planned to issue special sovereign bonds worth about CNY2 trillion (RM1.2 trillion) this year as part of a fresh fiscal stimulus.
While the market was rallying, the Shanghai stock exchange said in a statement on Friday that the bourse had abnormal and slow transactions in stock auctions and it was investigating the reasons behind the irregularity. — Reuters
