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Chinese stocks experienced a surge on Monday, thanks to the latest actions taken by Beijing to support the struggling property sector. This rally also extended to European markets during early trading.
The CSI 300 index, which tracks stocks listed on the Shanghai and Shenzhen exchanges, rose by 1.5%, while Hong Kong’s Hang Seng index jumped 2.5%. The surge was led by significant gains in developer stocks following Beijing’s announcement of policies that would enable major cities to reduce downpayments for homebuyers and encourage lenders to lower interest rates on existing mortgages.
Specifically, the Hang Seng Mainland Properties index saw an impressive 8% increase, with China Resources Land and Longfor Group, among others, experiencing gains of 9.7% and 8.1%, respectively.
These policies have been introduced to provide support to China’s property sector, which has struggled due to weak demand following the lifting of severe pandemic restrictions after three years.
Chinese property developer Country Garden also saw a significant rise of 14.6% after receiving approval from creditors to restructure the repayment of a nearly Rmb4bn ($550mn) bond that was set to mature on Saturday.
The positive effects of these easing measures were felt in European markets as well. The region-wide Stoxx 600 index rose by 0.7%, primarily driven by gains in real estate stocks. Additionally, France’s Cac 40 index increased by 0.7% and Germany’s Dax index advanced by 0.6%. It’s important to note that US markets were closed on Monday due to a holiday.
In Asia, Japan’s benchmark Topix index rose by 1%, reaching its highest level in 33 years, as global markets responded to weak US jobs data released at the end of the previous week.
Friday’s figures indicated that US unemployment had reached an 18-month high in August, which increased the pressure on the Federal Reserve to halt its interest rate hikes.
Over the past year, the central bank has steadily raised its benchmark federal funds rate to combat rising inflation. However, it has emphasized that any future tightening will be dependent on economic data.
With investors anticipating lower rates, the dollar weakened by 0.1% against a basket of six currencies on Monday.
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