**China’s Market Rally Hits a Speed Bump**
After a remarkable surge in Chinese stocks, investors were left disappointed on Tuesday when Beijing failed to announce a large-scale stimulus package, leading to a sharp decline in the market. The Hang Seng Index, which is heavily weighted with Chinese stocks, plummeted nearly 9%, its worst performance since October 2008. The CSI 300 Index also experienced a volatile day, initially rising 10% before giving up most of its gains to finish the day up a modest 6%.
The stimulus package, aimed at reviving China’s struggling economy, was first announced on September 24 and had fueled a massive inflow of capital into Chinese equities, particularly in real estate and consumer staples. However, Wall Street remains divided on whether now is the right time to invest in the market.
While some experts believe the recent rally is a sign of improving sentiment, others argue that it’s too early to tell if the stimulus will be enough to turn around China’s economy. Jeremy Schwartz, chief investment officer at WisdomTree, notes that the short-term pop in the market may not be sustainable, and that the country’s economic growth targets are still uncertain.
China’s top economic planner, the National Development and Reform Commission (NDRC), announced on Tuesday that it would issue 200 billion yuan ($28 billion) to local governments for spending and investment projects by year’s end. However, economists were expecting a much larger fiscal package worth around 2 trillion yuan ($284 billion).
Despite the setback, Chinese-listed exchanges and companies continued to show signs of life. The Shanghai Composite Index eked out gains of around 5%, while shares of e-commerce giants like Alibaba and PDD Holdings surged over 35% and 55%, respectively, over the past month.
Investors are now left to ponder whether China’s recovery is just getting started or if the rally is already losing steam. While some experts argue that it’s too early to write off China’s economy, others caution that the country’s geopolitical risks and uncertain growth prospects make it a tricky investment bet.
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