Stocks in mainland China slid yesterday, October 9, 2024, amid growing investor skepticism about the efficacy of stimulus plans from Beijing. The Shanghai Composite Index slid 5.3%, and the CSI 300 Index plummeted 5.8%, for that matter, thus closing its ten-day rally streak.
This turning has been mainly because the Chinese government was not able to announce new and profound measures of stimulus, which stand ready to revive the economy. Within a very-watched press conference, top officials only repeated previous plans without announcing additional fiscal support, which elicited much disappointment across investors.
The blow from this disappointment was transferred to various sectors. Tourism shares, for example, went down 7.8% as the spending of the holidays still stayed below its pre-pandemic level. The property shares then fell 9.7%, showing that this sector has yet to overcome some sore spots.
The ripples did not extend only to the Chinese mainland. Hong Kong’s Hang Seng Index, which had recently enjoyed a robust rally, decreased by 1.9%. Additionally, China’s still lack of fresh stimulus weighed on emerging-market stocks around the world and fueled worries about the sustainability of recent rallies in these markets.
Its government bonds rallied in the bond market as investors shifted to haven assets amid the stock slump. 30-year futures surged by as much as 0.8 percent, while benchmark yields edged lower in the cash market.
According to analysts, while the monetary stimulus measures that have been announced recently can be helpful to some extent, a much more serious fiscal package is required to be put in place in order to facilitate an enduring economic revival. The period of market volatility vividly underlines the Chinese equation between expectations of investors and the government’s policy actions.
