Chinese Equities Tumble as Stimulus Expectations Fall Short
In a dramatic reversal, mainland China’s stock market plummeted on Wednesday, poised to end a 10-day winning streak. The benchmark Shanghai Composite index nosedived 5.3%, while the CSI300 Index dropped 5.8%. The A-share market, comprising stocks listed in Shanghai, Shenzhen, and Beijing, experienced a wild ride the previous day, with record-breaking turnover of 3.485 trillion yuan ($493.17 billion).
Hong Kong’s Hang Seng index, which has been one of the top-performing major global markets this year, stumbled 1.9% after starting the day on a high note. The market’s optimism had been riding high on expectations of a significant fiscal stimulus package, rumored to be in the range of 2-3 trillion yuan.
Tourism shares took a hit, falling 7.8%, as data revealed that spending during the Golden Week holidays failed to reach pre-COVID levels. Property shares also suffered, with the CSI 300 Real Estate index plummeting 9.7%. Economists warn that a sustained recovery in property and consumption requires further stimulus and a lasting positive wealth effect from the equity market.
In overseas markets, Singapore-traded FTSE China A50 futures fell about 1.5%. The yuan traded at 7.0665 against the US dollar.
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