China and Hong Kong stocks are on track for their best weekly performances in 16 years, as Beijing rolled out its stimulus package this week ahead of the Golden Week holidays, according to a report by Reuters.
China’s blue-chip CSI300 Index and benchmark Shanghai Stock Exchange (SSE) Composite Index gained 15.7% and nearly 13%, respectively, for the week, the strongest weekly performances since late 2008. Hong Kong’s Hang Seng Index added nearly 13%.
“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.
China’s central bank on Friday cut the amount banks must hold in reserve, releasing an estimated USD142.6 billion (RM587 billion) in liquidity into the financial market.
The CSI300 Index and Shanghai Composite Index rose 4.47% and 2.88% at closing on Friday, respectively. (Google Finance stock updates)
China’s property shares extended gains on Friday, jumping 7.8% 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 Economist (China) at Nomura.
Consumer sentiment was also lifted as reflected in a 7.2% jump in consumer staple shares. Shares of liquor giant Moutai rose 4.7 per cent.
Hong Kong’s Hang Seng index was up 3.55% at closing, led by tech shares, which surged 6.6% on Friday.
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.
