China’s surging stocks began to falter, with Hong Kong shares falling sharply as officials provided few specific details on plans to support China’s slowing economy, according to Reuters.
Mainland markets recovered from a week-long pause, with turnover exceeding a trillion yuan in the first 20 minutes of trading. However, benchmarks soon fell from their highs as stimulated buying fever showed signs of cooling.
The Shanghai Composite rose 3.1 per cent in afternoon trade. Meanwhile Hong Kong’s Hang Seng, emerging as the fastest-performing major market this year due to rapid gains in recent sessions, fell 7.7 per cent.
The Australian dollar fell 0.4 per cent and the yuan hit its sharpest drop in a year. Prices of iron ore and other industrial metals also fell from morning highs.
Economic planner chairman Zheng Shanjie said China was “fully confident” of meeting economic targets and would allocate 200 billion yuan from next year’s budget to investment projects and support local governments.
The CSI semiconductor sub-index rose 16.4 per cent while the brokerage sub-index gained 10.6 per cent. Thematic indices from biotechnology to defence and electric vehicles also rose more than 10%.
Before the Golden Week break, China announced the most aggressive economic stimulus measures since the pandemic. The CSI300 index surged 25 per cent in five sessions, with last Monday’s CSI300 and Shanghai Composite posting their biggest gains since 2008.
The central bank announced cheap loans for buyback and swap programme. This would allow institutional investors to get access to cash to buy shares. Meanwhile, regulators called on financial institutions to tighten control over leverage and prevent illegal entry of bank loans into the stock market.
