&w=1024&resize=1024,0&ssl=1 "Chinese stock markets suffer biggest decline since 2020 amid skepticism over stimulus stimulus global news")
Chinese shares listed on overseas exchanges suffered their biggest decline in more than four years as investor impatience over Beijing's stimulus measures and weak holiday spending data dampened sentiment.
The CSI 300 index fell 7.1 percent, erasing gains from Tuesday when mainland markets reopened after the Golden Week holiday. Although indicators calmed down when the finance ministry said it would hold a briefing on fiscal policy, selling pressure increased again to measure its first loss in 11 days. An index of Chinese shares listed in Hong Kong fell on Tuesday after falling more than 10 percent. Meanwhile, the Golden Dragon index of Chinese shares listed on the US stock exchange fell by 3.7%.
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While stocks have rallied in recent weeks following a series of policy announcements aimed at supporting the economy, enthusiasm for a stimulus-led rally in stocks is cooling amid a lack of further significant initiatives at a key policy meeting on Tuesday. A growing number of strategists and fund managers say Beijing needs to back up its spending promises with real money, while others warn the rally has gained momentum after benchmark indexes surged more than 30 percent in a matter of days.
Yi Wang, head of quantitative investing at CSOP Asset Management Ltd, said: “The market is torn between expectations for more stimulus and economic reality. “Investors want a faster translation of stimulus funds into improved corporate income, better macro data – whether on inflation, employment or local government debt. However, there is a lag between these expectations and economic reality.”
Finance Minister Lan Foan will present measures to strengthen fiscal policy to boost economic growth and answer questions from reporters during a briefing that begins Saturday at 10 a.m. local time, the State Council Information Office said in a statement Wednesday.
Stock investors had expected more fiscal spending to stave off a slowdown that could put the country's 2024 target of 5% growth out of reach. Banks including Morgan Stanley and HSBC Holdings Plc expect stimulus worth 2 trillion yuan ($283 billion), while Citigroup Inc. This amount is 3 trillion yuan
“Anxiety Level”
Wednesday's decline in the CSI 300 index was the biggest one-day decline since February 2020. The Hang Seng China Enterprise Index, which tracks Chinese shares listed in Hong Kong, fell 1.6%. The indicator wiped out all gains while onshore markets remained closed.
Investors have become concerned about a rapid rebound in Chinese stocks since late September unless Beijing announces a strong fiscal package that could revive spending and support the real estate sector.
Returning after a week's break, Chinese stock exchanges started Tuesday's session with a bang – the CSI 300 rose by 11 percent at the opening. However, enthusiasm faded when officials from the National Development and Reform Commission announced no further major stimulus measures.
“At yesterday's NDRC press conference, authorities appear to have expressed some discomfort with the strong market conditions, in part due to difficult experiences with retail-driven market volatility in 2015.” – said Homin Lee, senior macroeconomic strategy specialist. Odier Pawn Shop in Singapore. “It will remain important for them to present a concrete plan to fight inflation at the NPC standing committee meeting later this month.”
Holiday expenses
Chinese government bonds rose, with 30-year futures rising 0.8 percent and benchmark spot yields falling slightly as investors returned to the heavenly asset amid falling stock prices.
Spending patterns over the Golden Week holiday period suggest consumer sentiment remains subdued despite some signs of stabilization following a round of stimulus.
Chinese tourists spent less during the week-long holiday ending Monday than during the pre-pandemic break. Data from the Ministry of Culture and Tourism show that travelers traveled 10.2% less during the Golden Week. more than in 2019, and expenses increased only by 7.9%.
Meanwhile, leveraged equity positions have grown, risking greater turnover if the market declines and they need to be closed. Outstanding margin loans on the Shanghai and Shenzhen exchanges rose to 1.54 trillion yuan ($218 billion) on Tuesday, up 7.4 percent from the last trading session on Sept. 30, according to data compiled by Bloomberg.
As investors debate the fate of Chinese stocks in the coming months, some global money managers are turning to selective stock selection.
Now is the time to take profits in overbought sectors such as insurance, home appliances, electric vehicle batteries, electric vehicles and cars, said Louis Lau, fund manager at Brandeis Investment Partners in San Diego, California. He sees value in industries such as internet, sportswear, Macau gaming, food and beverage and tourism.
“We are at a point where stock selection is becoming more and more important,” Nicholas Yeo, head of China equities at abrdn Plc, said in an interview on Bloomberg Television. “We are in a bull zone, but there will be volatility. We maintain a long-term view on sectors such as consumption, which are key to the economy in the long term.
