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Chinese shares rose on Monday after Beijing sought to reassure investors over the weekend about its plan to boost spending to boost the world’s second-largest economy.
The finance ministry said on Saturday it plans to recapitalize local governments and state banks and buy unsold assets as part of its stimulus plans, but held back from providing detailed figures.
Chinese investors, who sparked a record stock market rally in late September after Beijing announced monetary stimulus, are waiting for the government to unveil its planned fiscal spending.
On Monday, mainland China’s CSI 300 benchmark rose 1.9 percent, with high-tech manufacturing groups such as Cambricon Technologies, CATL and BYD leading gains in the index.
Markets fell slightly in Hong Kong, with the main benchmark Hong Kong index down 0.8 percent.
“Market opinions were clearly different after the finance ministry’s explanation,” said Zhang Gui, an analyst at Haidong Securities. But after last week’s rally was dampened by uncertainty over the government’s stimulus plans, he said, some investors have started to re-enter the market.
Economists in the caution camp said the finance ministry’s plans would help provide the basis for a recovery but they need to see details, including how much the government plans to spend and the terms of the plans.
Others were more optimistic that the government would deliver on its promises in key meetings scheduled in the coming weeks, such as a session of the National People’s Congress, the rubber-stamp parliament’s standing committee that can approve the new government bond. publication.
“These changes are enough to sustain confidence leading up to the meeting of the National People’s Congress,” said Wei Li, head of China multi-asset investments at BNP Paribas. He said more decisions on stimulus are expected at the Communist Party leaders’ meeting at the Central Economic Work Conference in December.
BEIJING Beijing has launched several stimulus programs since its property sector collapsed in the past three years, but none have been able to ensure a deep fall in house prices.
On Thursday, the People’s Bank of China began implementing a program to help domestic financial institutions buy more shares, the first central bank tool to boost stock market liquidity.
The tool’s announcement in late September sparked a market rally that sent stock prices soaring more than 30 percent before cooling off last week.
One of the main concerns among economists is data showing firmer deflationary pressures following Sunday’s meeting of finance ministers.
The weekend conference sent mixed signals, Winnie Wu, chief China equity strategist at Bank of America Securities, said Monday, and the market is now in “long-term greed and short-term caution” mode.
“Although some investors are disappointed, we think the policy tipping point has been reached,” Wu said. “We should see continued policy momentum in the coming weeks, with more fiscal stimulus and structural reforms likely in 2025.”
But Goldman Sachs economists said the Finance Ministry’s suggestion that it could spend Rmb2.3tn ($325bn) from previously approved bonds in the final quarter was positive for economic growth.
That led Goldman to raise its forecast for China’s economic growth this year to 4.9 percent from 4.7 percent, closer to Beijing’s official 5 percent target.
