China's stock market is experiencing a significant surge following the recent Politburo meeting chaired by Xi Jinping. The meeting emphasized the implementation of expansionary fiscal policies to address the issues of declining home prices and high youth unemployment. This has resulted in the Hang Seng Index entering a bull market and the CSI 300 Index achieving its best weekly performance in years. Pinpoint Asset Management anticipates a further 20% rise in stock prices, driven by the central bank's introduction of 800 billion yuan in funding facilities and commitments to lower policy and mortgage rates.
The rally marks the biggest single-week jump since 2008, with the CSI 300 Index rising by 14.9% and the Hang Seng Index by 12.9%. Investors are optimistic about the stimulus measures, including interest rate cuts and property market support, which are expected to bolster the struggling economy. Mainland Chinese property stocks have surged by 20% this week, reflecting growing investor confidence in the market's recovery.
However, the rapid influx of orders has overwhelmed the Shanghai Stock Exchange, causing trading glitches and delays. Despite these technical issues, the market sentiment remains positive, driven by fears of missing out on the rally. The Politburo's focus on strengthening fiscal and monetary policies to stabilize the property sector is seen as a decisive move to address the economic challenges.
Overall, the recent measures have sparked a wave of optimism among investors, with significant gains in both mainland and Hong Kong stock markets. The government's commitment to achieving a 5% growth target for 2024, coupled with the central bank's monetary easing, is expected to continue driving the market's upward momentum.
