(Bloomberg) — Chinese stocks entered a correction after another highly anticipated policy briefing failed to have the growth-boosting effect investors had hoped for.
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The CSI300 index ended the day 1.1% lower, representing a decline of about 11% from its October 8 high. A Bloomberg Intelligence index of Chinese development stocks fell more than 12%, on track to wipe out gains from the previous session. The Hang Seng Chinese Enterprise Stock Index fell more than 1%.
Housing Minister Ni Hong said at a press conference on Thursday that China would nearly double its credit line for unfinished housing projects to 4 trillion yuan ($562 billion), largely repeating steps the government had taken previously. . It came after a newspaper run by the Ministry of Housing suggested that the Chinese government would “unleash a powerful combo of punches”, raising market expectations.
Market reaction suggests authorities face a high hurdle to satisfy traders and revive a sluggish rally. Skepticism is creeping in again as Beijing refrains from unleashing fiscal firepower comparable to the central bank's policy blitz in late September. The briefing comes as yet another disappointment after announcements by the Treasury Department and state economic planners earlier this month sparked wild market swings on scant spending details.
“Equity investors are looking for big headline numbers to further push stock prices up, but the government needs to gradually bring the economy and housing market back to health,” said Beisaan Lin, managing director at Union Bancare Privy. We're focusing on that,” he said. “As long as there is such a discrepancy in expectations, press conferences are bound to be disappointing.”
Economists polled by Bloomberg say economic data to be released on Friday predicts economic growth in the third quarter will be 4.5% from a year ago. This is the lowest level since March 2023, intensifying debate over whether the stimulus measures announced so far are enough to turn around the moribund economy.
With momentum rapidly disappearing, some investors are waiting for the second leg of the rally to resume. For traders who have experienced many false dawns over the past few years, the slow recovery will seem like deja vu.
“We can't say that no new policy measures have been introduced, but it does give the market a sense that real progress has been made,” said Shen Meng, director of Beijing-based specialist investment bank Chanson & Company. I can hardly do it.” Investor confidence continues to contract and sentiment remains low, which will put increased pressure on the Chinese government to increase policy support in the future. ”
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