- Chinese stocks soared Tuesday morning as Beijing pledged measures to shore up China’s ailing economy.
- On Monday, China’s leaders vowed to step up policy support to boost domestic consumption as the recovery from the COVID crisis has been slower than expected.
- China’s GDP grew 6.3% yoy in the second quarter, beating market expectations of 7.3%.
Tourists at the Bund on July 11, 2023 in Shanghai, China.
Vcg | Visual China Group | Getty Images
Chinese stocks rose sharply on Tuesday as Beijing vowed to step up measures to shore up China’s ailing economy.
Hong Kong’s Hang Seng Index rose more than 3%, China’s tech-heavy ChiNext rose 1.8% and the Shanghai Composite Index rose 1.81% on Tuesday morning in Asia.
Chinese real estate developers Country Garden and Longfor rose 14.3% and 20.7%, respectively. Sunac rose 12.5%, China Vanke rose 11.02% and China Overseas Land and Investment rose 11.39%.
A day earlier, Chinese real estate stocks plummeted on renewed debt fears. The Chinese government cracked down on real estate sector debt in August 2020.
The stock rally comes after China’s leaders pledged on Monday to step up policy support to boost domestic consumption as the recovery from the coronavirus crisis has been slower than expected.
According to official data, China’s gross domestic product rose 6.3% year on year in the second quarter, underperforming the 7.3% forecast by economists. This represented growth of 0.8% qoq, slower than the 2.2% qoq recorded in the January-March period.
China’s top leaders met Monday for the much-anticipated Politburo meeting and hinted at steps to “adjust and streamline” real estate policies in what the leadership called an “agonizing” economic recovery.
The state-run Xinhua News Agency quoted the 24-member Politburo as saying, “The economy is facing new difficulties and challenges.” This is mainly due to weak domestic demand, operational challenges for companies and “a grim and complex external environment,” it said.
“The meeting emphasized the need to actively increase domestic demand, fully exploit the fundamental role of consumption in promoting economic growth, and expand consumption by increasing residents’ incomes,” Xinhua said.
“It is necessary to boost the consumption of automobiles, electronic products and home textiles, and promote the consumption of services such as sports, leisure and cultural tourism,” the report said.
Hong Kong-listed shares of internet giants rose on Tuesday. Alibaba shares rose 4.7%, while Tencent gained nearly 4%. Meituan and Baidu shares rose 5.7% and 6.8%, respectively.
In EVs, Xpeng rose 11%, Li Auto rose 4.15%, and BYD rose 2%.
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“This is further confirmation that the [Chinese] “Policymakers have heard the market’s concerns about the need for further support for the domestic economy,” Xiaolin Chen, head of international division at KraneShares, said on CNBC’s Street Signs Asia on Tuesday.
“They want to reach this year’s GDP target of 5%. The first task they must do is create jobs for the labor force in China,” Chen said.
“I definitely see some encouraging wording in the statement that addresses a lot of concerns from people who are heavily focused on the real estate market, employment, private investment, etc. So far the wording has been encouraging.”