China Stock Markets Surge Amid U.S. Rate Cuts

China's stock markets experienced gains on Thursday, driven by real estate developers and liquor makers amid hopes that U.S. rate cuts will allow Beijing to further stimulate the economy. Major indices such as CSI300 and Shanghai Composite rose, while Hong Kong's Hang Seng and Hang Seng Tech Index also saw significant increases.

China's stock markets bounced back from early losses on Thursday, buoyed by gains in the real estate and liquor sectors. Investors are optimistic that the commencement of U.S. rate cuts will enable Beijing's policymakers to inject more stimulus into the struggling economy. The CSI300 Index and Shanghai Composite Index both posted gains of 0.7% and 0.4%, respectively.

In Hong Kong, the benchmark Hang Seng climbed 1.3%, with the Hang Seng Tech Index jumping over 2%. The U.S. Federal Reserve's recent larger-than-expected half-percentage-point rate cut has spurred investor confidence, as it provides Beijing more leeway for economic easing with less risk of affecting the yuan. The CSI Liquor Index and CSI Real Estate Index surged by 4% on the news.

The Hong Kong Monetary Authority followed suit by cutting its base rate by 50 basis points to 5.25%. Mainland property stocks listed in Hong Kong surged 5%, while local real estate firms saw a 2% increase. The Federal Reserve's moves benefit Hong Kong stocks more than China's A-shares due to their sensitivity to external liquidity conditions, according to China International Capital Corp.

Despite the positivity surrounding Fed rate cuts, Yan Wang, Chinese and emerging markets strategist at Alpine Macro, cautioned that China's domestic policies and growth outlook will be more influential on market movements than actions by the Federal Reserve.

(With inputs from agencies.)