Chinese stocks experienced a notable rally fueled by regulatory actions targeting quantitative funds and bolstered by support measures for the property sector. The Hang Seng China Enterprises Index surged by up to 4%, reaching its highest level in seven weeks, signaling a significant recovery from earlier losses in the year. Notably, property developers led the gains following reports of substantial funding allocations to the sector by state media.
The market’s optimism reflects growing confidence in policy interventions aimed at stabilizing the equity market. Recent measures, including an unexpected cut to a mortgage reference rate, underscore a more assertive approach by authorities. Efforts to tighten supervision of quantitative trading, particularly leveraged products, are viewed as pivotal in mitigating market volatility.
Shen Meng, director at Chanson & Co in Beijing, highlighted the impact of regulatory actions on weakening short-selling pressures. Investors are eagerly awaiting updates on forthcoming policy meetings, anticipating further supportive measures.
Banking and technology stocks also saw significant gains in Hong Kong, with Meituan surging over 7%. Meanwhile, the onshore benchmark CSI 300 index advanced by more than 2%. Foreign investors displayed strong interest, pouring over 10 billion yuan ($1.4 billion) into onshore shares via trading links with Hong Kong.
Dickie Wong, executive director of research at Kingston Securities Ltd., noted the unexpected influx of capital into the onshore market following the sizable cut to the five-year loan prime rate. He attributed investor reactions to the recent measures aimed at supporting the property market.
Although regulatory adjustments, such as short-selling restrictions and quant trading curbs, have mitigated broader market risks, sustained market positivity hinges on the implementation of robust economic stimulus measures.
Investor sentiment remains cautious, with attention shifting to upcoming economic meetings for indications of Beijing’s commitment to bolstering economic recovery. Kelly Chung, chief investment officer of Multi Assets at Value Partners, emphasized the importance of improvements in the property sector and consumption demand for sustained investor confidence.
While the recent rally signals a temporary respite, market stability and long-term growth prospects will depend on concerted efforts to address underlying economic challenges and provide consistent policy support.
