SINGAPORE – Stock markets in Hong Kong and mainland China experienced a significant surge on Monday, September 30, extending the gains from the previous week after Chinese authorities introduced a range of measures aimed at reviving the world’s second-largest economy. The rally saw Shanghai soar by more than 8%, marking its best performance since 2008, while Shenzhen jumped over 10%. Hong Kong also briefly surged by 4%. Investors flocked back into these markets after Beijing announced economic stimulus measures, including interest rate cuts, relaxed banking reserve requirements, and softened home-buying restrictions.
Among the latest developments, three major Chinese cities—Shanghai, Guangzhou, and Shenzhen—eased restrictions on property purchases. Additionally, six of China’s largest banks announced they would adjust interest rates on existing home loans in response to a request from the central bank. This has particularly benefited developers in Hong Kong, with Kaisa’s stock rising over 80%, Sunac gaining more than 55%, and Agile Group up by 19%. Technology stocks also saw positive gains, with e-commerce giant JD.com surging more than 11%, and Alibaba rising nearly 8%. This rally has been ongoing for the past six trading days, with Shanghai up by over 20%, just ahead of China’s Golden Week holiday, during which the stock markets will be closed.
Despite the positive market response, Moody’s economist Harry Murphy Cruise noted that these measures reflect growing concerns about the health of China’s economy. The Chinese government moved up discussions on economic policies to this week’s Politburo meeting, rather than sticking to the planned December schedule, signaling the urgency of addressing the economic challenges. This was further highlighted by data showing that China’s factory activity shrank for the fifth consecutive month in September. However, Kathleen Brooks, research director at XTB broker, suggested that the market is more focused on the impact of the stimulus package, and the data from October will be more significant for future market movements.
While China and Hong Kong experienced euphoria, Tokyo’s stock market faced a sharp decline. The Nikkei fell dramatically after Shigeru Ishiba was elected as the new leader of Japan’s ruling party. This raised expectations that the Bank of Japan would continue its policy of tightening interest rates, which had a negative impact on exporters. As the yen strengthened, hitting 141.65 per dollar, major companies like Sony, Toyota, and Tokyo Electron saw significant drops in their stock prices. Ishiba’s win and his potential shift in economic policy, such as the possibility of increasing corporate taxes, contributed to concerns about the future direction of Japan’s economy.
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Meanwhile, stock markets in other parts of Asia were mixed. While Sydney, Bangkok, and Singapore saw gains, markets in Seoul, Taipei, Wellington, Mumbai, Manila, and Jakarta ended in the red. In Europe, London’s stock market dropped after data showed slower-than-expected economic growth in the UK during the second quarter. Paris and Frankfurt also experienced declines. In the United States, Wall Street showed modest movement despite inflation data showing a slowdown, which raised hopes that the Federal Reserve might implement further interest rate cuts.
Global oil prices also saw a rise of over 1% as traders closely monitored developments in the Middle East, where ongoing tensions and conflicts, including Israeli airstrikes on Hezbollah targets and Houthi rebels, continued to raise concerns about a broader conflict. The recent attack, which killed Hezbollah leader Hassan Nasrallah and a senior Iranian general, added to the geopolitical uncertainty in the region. Iran has since warned that the killing will not go unanswered, adding further volatility to global markets.
