Chinese stock markets reopened after the week-long Golden Week break with investors eagerly awaiting further stimulus measures from the National Development and Reform Commission (NDRC). The markets had been buoyed by previous government actions such as rate cuts and liquidity support aimed at stabilizing the economy. However, the latest announcements failed to meet expectations, leading to mixed market reactions.
Key Market Movements
- The Shanghai Composite Index surged by as much as 10.1% when markets opened but cooled off by the end of the morning session, closing up by 4.8%.
- Chinese stocks in Hong Kong, which had traded during the break, saw a sharp decline, with the Hang Seng Index falling by 5.6% after a brief surge.
- Investors were anticipating more aggressive measures to drive growth but were left underwhelmed by the lack of new significant policies.
NDRC’s Position
NDRC Chairman Zheng Shanjie described the economy as stable, stating that China was on track to meet its growth target of around 5%. While Zheng highlighted loan support for medium-sized enterprises, local government spending, and future bond issuances, his remarks largely reiterated previous policies. This left investors disappointed at the lack of urgency or fresh stimulus measures, especially regarding stabilizing the real estate sector.
Investor Reaction
The market’s initial excitement was dampened by a sense of disappointment at the absence of concrete new actions. Analysts noted that investors may have taken profits following the recent rally, with growing concerns about global risks such as the U.S. elections and geopolitical conflicts in the Middle East also weighing on sentiment.
Despite the NDRC’s positive outlook on China’s economic fundamentals, the day’s events were seen as a missed opportunity to further energize the market and reassure investors.
