China-linked stocks climb on bevy of stimulus measures
(Reuters) – U.S.-listed shares of Chinese firms and China-focused funds jumped on Friday and are set for another day of strong gains, aided by the latest in a line of aggressive stimulus measures to propel economic growth in the world’s second-largest economy.
The People’s Bank of China (PBOC) has lowered interest rates and reduced the amount of cash banks must hold as reserves by 50 basis points.
Reuters also reported that top Chinese cities Shanghai and Shenzhen are planning to lift key home purchase restrictions in the coming weeks, while more fiscal measures are expected to be announced before the country’s week-long holidays starting Oct. 1.
The U.S. listings of Chinese e-commerce giants Alibaba (NYSE:BABA) Group rose 0.7% before the bell, while JD (NASDAQ:JD).com and PDD Holdings were up 3% and 1.6%, respectively.
Chinese electric-vehicle maker Nio (NYSE:NIO) gained 4%, while gaming company Bilibili (NASDAQ:BILI) rose 2.8%.
Exchange-traded funds tracking the China market also jumped as domestic stocks notched their best week since 2008.
The iShares MSCI China ETF rose 1% premarket, after notching its highest close since March 2023 on Thursday, while tech-focused KraneShares CSI China Internet ETF rose 1.9%.
Still, many analysts question whether the stimulus measures are enough to renew the interest in China, formerly one of the world’s top growth stories, as deflationary pressures, weak consumer demand and a severe downturn in the property market have kept investors cautious.
“Chinese equities, China-plays and other pro-cyclical assets are likely to post further tactical gains,” said analysts at BCA Research. “However, the implications for the Chinese economy remain unclear at the current juncture.”
Shares had rallied on Tuesday after the PBOC launched its biggest easing measures since the pandemic, but retreated on Wednesday as investors questioned whether the measures were sufficient.
Pledges from policymakers for necessary fiscal stimulus to meet this year’s 5% growth target, however, appeared to allay certain concerns.
