China’s Property Market Stimulus Falls Flat
Chinese stocks retreated from earlier gains as a highly anticipated joint ministry briefing on supporting the property market failed to deliver significant new stimulus measures. The CSI 300 Index plummeted 0.1% as of 11:18 a.m., reversing a 1.3% rise, while a Bloomberg Intelligence gauge of Chinese developer stocks nosedived more than 8%.
A Lukewarm Response
The briefing, which was expected to unveil bold measures to revitalize the faltering property market, instead offered a modest expansion of a program to support “white list” projects from 2.23 trillion yuan to 4 trillion yuan ($562 billion). This move fell short of market expectations, which were fueled by a newspaper hinting at a “heavy punch combo” of stimulus measures.
A High Bar to Satisfy Traders
The lackluster response suggests that authorities face a significant challenge in meeting the lofty expectations of traders and reigniting a faltering rally. Skepticism has been growing as Beijing’s stimulus efforts have failed to match the surprise package unveiled by the central bank in late September.
A Mismatch in Expectations
According to Vey-Sern Ling, managing director at Union Bancaire Privee, “Equity investors are looking for big headline numbers to drive stocks up further, while the government is more focused on bringing the economy and housing markets gradually back to health.” This mismatch in expectations has led to disappointment in previous briefings, and Thursday’s event was no exception.
Economic Growth Slows
Data due Friday is expected to show that China’s economy expanded 4.5% in the third quarter from a year ago, the slowest pace since March 2023. This has intensified debate about whether the stimulus measures announced so far will be enough to turn around the struggling economy.
Investors Wait for Revival
Some investors are holding out for the second leg of the rally to resume, but a delay in market revival would be a familiar pattern to traders who have been burned by multiple false dawns over the past few years. As Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co., noted, “Investor confidence continues to shrink, and the sentiment remains low, which will add pressure for Beijing to ramp up policy support in the future.”
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