China Stocks Set to Reopen: Investors Eager for Stimulus News

China’s stock market is gearing up to reopen on Tuesday after a week-long holiday, and all eyes are on potential fiscal stimulus measures from the government. Optimism is in the air, but how sustainable is it?

Optimism Mixed with Caution

Lynn Song, chief economist at ING, suggests that while optimism may continue, it could slow down. Gary Ng, a senior economist at Natixis, echoes this sentiment, warning that market gains may be limited unless the economy shows real improvement to support high valuations.

Key Meeting to Watch

On Tuesday, a panel from the National Development and Reform Commission (NDRC) will hold a press conference at 10 a.m. local time. This is crucial as investors are looking for clear policy directions aimed at boosting the real economy. Shaun Rein, managing director of China Market Research Group, highlights that this meeting could provide insights into how the government plans to tackle economic challenges.

Stimulus Measures Already Announced

Before the holiday, Chinese authorities introduced several stimulus policies to jumpstart the economy. These included:

  • Interest rate cuts
  • Lower reserve requirements for banks
  • Eased property purchase rules
  • Increased liquidity support for the stock market

These measures have already sparked a significant rally, with major Chinese indexes climbing over 25%. The CSI 300 blue-chip index even saw an 8% surge before the holiday break.

Futures Contracts Are Soaring

Futures contracts tied to the MSCI China A50 Connect Index have surged nearly 15% since September 30. Similarly, SGX FTSE China A50 Index futures rose by 12.7% during the holiday period. Investors are eager for more specific announcements that could keep the momentum going.

What’s Next?

The market has been buzzing ever since the government announced plans for increased fiscal spending on September 26. Erica Tay, director of macro research at Maybank Investment Banking Group, stresses the importance of the NDRC providing concrete details during Tuesday’s press conference.

While the Ministry of Finance won’t be attending, many are still hopeful for major policies to boost growth. According to Shaun Rein, it’s crucial that the new measures focus on the real economy to maintain the rally’s momentum.

Conclusion

As China’s stock market prepares to reopen, investors are on high alert for news about fiscal stimulus that could shape the economic landscape. With previous measures already boosting market confidence, the question remains: will the government deliver the specifics needed to keep the momentum alive?