On September 24, 2024, the People's Bank of China announced significant stimulus measures aimed at revitalizing the country's economy. This initiative marks the largest economic stimulus since the onset of the pandemic, and includes interest rate cuts, reductions in mortgage rates, and new tools designed to enhance capital market funding.
Following the announcement, U.S.-listed shares of Chinese firms saw a notable rise, with e-commerce giants such as Alibaba Group, JD.com, and PDD Holdings experiencing gains between 5.4% and 8%. Chinese auto manufacturers Nio and Li Auto also rose approximately 7%, while Tencent Music Entertainment Group's shares surged by 14%.
Mining stocks benefited from increased metal prices, with the S&P 500 materials sector reaching a record high. Casino operators with significant operations in Macau, such as Wynn Resorts and Las Vegas Sands, saw their shares increase by 4% and 5.6%, respectively. Furthermore, exchange-traded funds tracking Chinese markets, including the iShares MSCI China ETF, rose by 6.4%, marking the best day for the blue-chip CSI300 index in four years.
Despite the positive market reaction, analysts express caution regarding the sustainability of this growth. Many investors have been hesitant to engage with Chinese assets due to previous economic challenges, including weak consumer demand and a downturn in the property market. Global brokerages like Goldman Sachs and Citigroup have recently revised their 2024 economic growth forecasts for China, indicating a need for further fiscal stimulus.
Colin Cieszynski, chief market strategist at SIA Wealth Management, noted that this could be just the beginning of stimulus measures, suggesting that more interventions may be necessary to drive substantial economic recovery.
Source: Reuters, September 25, 2024