Chinese Stocks Drop as Investors Await Key Fiscal Stimulus Announcement

October 11, 2024 03:26 PM AEDT | By Team Kalkine Media

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Chinese Stocks Drop as Investors Await Key Fiscal Stimulus Announcement — Image source: Shutterstock

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Highlights

CSI 300 Index fell by 1.6%, extending losses for the week to 2.1%.

Investors await the Ministry of Finance briefing on potential fiscal stimulus.

Concerns rise about market rally sustainability ahead of new policy announcements.

Chinese stocks experienced a decline this week as market participants reduced risk ahead of an important policy briefing by the Ministry of Finance. The CSI 300 Index, which tracks the top stocks on the Shanghai and Shenzhen exchanges, fell by 1.6%, extending weekly losses to 2.1%. Hong Kong's stock market remained closed for a holiday on Friday.

The dip in the market came after a week of volatility, driven by underwhelming holiday spending data and reactions to previous government statements. Market sentiment is cautious as traders await Saturday’s briefing from the Ministry of Finance, where potential fiscal stimulus measures may be introduced. The outcome of the briefing is crucial, as many are concerned that the rally in Chinese stocks, which started in late September, may reverse if the announced measures do not meet market expectations.

According to a Bloomberg survey, there is widespread anticipation that the Chinese government may introduce up to 2 trillion yuan ($US283 billion) in fresh fiscal stimulus. Market participants believe this could involve the issuance of more government debt to boost public spending. Special bonds are expected to be one of the main tools used to facilitate this economic expansion.

Investors will be watching closely to see how the government’s policy actions unfold, as this will play a significant role in shaping market dynamics in the near term. Traders are keen to gauge whether the measures will be enough to stabilize the market or if further declines may occur.

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