China stocks soar most since 2008 on stimulus blitz to enter bull market

SHANGHAI - Chinese stocks extended one of their most remarkable turnarounds in history on Sept 30, soaring for a ninth straight day as government stimulus entices investors back to one of the most beaten-down markets worldwide.

The CSI 300 blue-chip index closed up 8.48 per cent, its biggest daily gain since 2008, after clocking its best weekly performance in nearly 16 years last week.

The index, which lost more than 45 per cent of its value from a 2021 high through mid-September, has soared 27 per cent to enter a technical bull market.

The Shenzhen Composite Index on China’s second exchange soared 10.93 per cent on Sept 30, while Hong Kong’s Hang Seng Index rallied 2.43 per cent.

The CSI 300 index soared nearly 16 per cent last week and the broader Shanghai Composite jumped nearly 13 per cent, both scoring their biggest weekly gains since November 2008. Similarly, the Hang Seng Index delivered its biggest weekly rise since 1998, and the fifth-largest in the last half century.

The extended rallies came after the

central bank moved to lower mortgage rates on Sept 29

, while three of China’s largest cities also relaxed rules for home buyers, sending mainland-listed property stocks jumping more than 8 per cent.

The latest measures were among the key elements of a

sweeping stimulus package

released on Sept 24 that also included interest rate cuts, the freeing up of cash for banks, as well as liquidity support for the stock market.

While the market has experienced several similar-sized rallies in recent years only to plumb new depths, investors are betting the market’s current momentum may be sustainable in at least the near term.

In a sign of continued frenzy, combined turnover on both the Shanghai and Shenzhen bourses exceeded one trillion yuan (S$182.6 billion) in a little over 30 minutes since trading began on Sept 30.

“The pace of the turnaround is clearly reflective of how oversold the market was,” said Saxo Markets global markets strategist Charu Chanana. “There is a clear belief that this time is different when it comes to the authorities’ support for the markets.”

Brokerages were among the top gainers, with Citic Securities hitting the 10 per cent daily upside limit. Almost all of CSI 300’s component stocks were in the green.

The fear of missing out is also spreading offshore, with hedge funds selling US technology stocks and piling into mining and materials firms.

Invesco Asset Management strategist David Chao said: “I think the euphoric surge that we saw last week in China markets could turn into something more concrete and sustainable because there appears to be a complete policy shift that could finally address the cyclical headwinds of the past three years.

“While there may still be debate over how these policy shifts are implemented and whether enough has been done, I think a new direction has been charted.” BLOOMBERG, REUTERS