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1China’s Policy Reversal Sparks ‘Mind Boggling’ Stock Rally
The government has fired up investors by encouraging banks to lend more to buyers of stock and real estate, but economists say more stimulus is needed.
Oct. 7, 2024, The New York Times
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Share prices surged as trading resumed on Tuesday in mainland China following a weeklong national holiday, as investors rushed in to make bullish bets that Beijing’s leaders are committed to providing stimulus for the faltering Chinese economy.
Before the break, the Chinese government jolted stock markets sharply higher with a package of measures aimed at halting the cycle of falling real estate prices and weakening consumer confidence.
The central bank and other top financial agencies announced on Sept. 24 that they were cutting interest rates, reducing the minimum down payments for mortgages, and encouraging banks to lend more money for investors to buy shares.
Two days later, the ruling Politburo issued an uncommonly blunt call for more to be done to help the economy. Several municipal governments soon followed by trimming or dismantling their restrictions on real estate purchases as a way to stabilize the housing market in their cities.
The CSI 300, an index of large companies traded in Shanghai and Shenzhen, soared 25 percent in heavy trading over the five sessions before the holiday. Market operators tested their systems on Monday in anticipation of another influx of activity.
The CSI 300 jumped more than 10 percent when trading started on Tuesday, before pulling back to about 5 percent higher.
Retail investors in China have rushed into the markets, flocking to online trading platforms like Snowball and Tiger Brokers. The craze for Chinese stocks has also spread to investors outside the country who feared they were missing out on the biggest rally in decades.
