Chinese stocks post biggest gain in month on fiscal stimulus to shore up growth
Shanghai rallies 2.6 per cent; Hong Kong’s Hang Seng rises 0.8 per cent
“It seems that the government is quite keen on propping up growth,” said Wu Kan of Soochow Securities
Zhang Shidong, South China Morning Post
11 Jun, 2019
China’s stocks climbed the most in a month on signs policymakers were ramping up fiscal tools to hold in check a decline in growth just before the release of key economic data.
The Shanghai Composite Index rallied 2.6 per cent, or 73.59 points, to 2,925.72 on Tuesday, its biggest gain since May 10. Hong Kong’s Hang Seng Index rose 0.8 per cent to 27,789.34.
Signs have been mounting that Beijing has been stepping up efforts to arrest a deceleration in economic growth. The finance ministry said on late Monday that special bonds sold by local governments will be allowed to bankroll construction of key projects and financial institutions will be encourage to provide additional funding. Citic Securities, the nation’s biggest publicly traded brokerage, said in a Tuesday report that the relaxation will boost infrastructure investment starting in the third quarter and its growth rate will rise above 8 per cent by the year end.
“It seems that the government is quite keen on propping up growth, and such a move can be seen as a stimulus,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “And also the 'National Team' might be buying to boost sentiment.” He referred to intervention by state-backed funds.
The announcement on easing the use of special bonds came as China is scheduled to release a set of key economic data for May this week and the deadlock over the trade talk between Beijing and Washington continues. US President Donald Trump threatened to raise tariffs on Chinese imports again unless his Chinese counterpart Xi Jinping meets him in the forthcoming Group of 20 summit in Japan.
Infrastructure-linked stocks got a boost from the policy support...