Beijing's Bold Stimulus Boosts China and Hong Kong Stocks

China and Hong Kong stocks climbed for the second day following Beijing's announcement of a comprehensive stimulus package. Measures include rate cuts, easing mortgage requirements, and new funding for equity purchases. Strong investor sentiment and attractive valuations contributed to market gains, with the property market seeing particular benefits.

China and Hong Kong stocks surged broadly for a second consecutive day on Wednesday, fueled by Beijing's announcement of an extensive stimulus package on Tuesday. China's CSI300 Index rose 2.1%, while Hong Kong's Hang Seng index increased by 2%, adding to the significant gains seen the previous day.

Among Beijing's measures - the largest since the pandemic - were interest rate cuts, eased mortgage requirements, and fresh equity funding aimed at reviving the crisis-hit property market, although analysts noted a lack of real economic support policies. In response, the People's Bank of China on Wednesday reduced the one-year medium-term lending facility rate to 2.00% from 2.30%.

Market sentiment has markedly improved due to the substantial stimulus and attractive valuations of Chinese stocks. Local and some foreign investors are increasing their positions. "This was more substantial than expected, and the market believes more could follow," said Joshua Crabb, head of Asia-Pacific equities at Robeco. Gains were led by the real estate, automotive, and brokerage sectors. Trading is expected to be buoyant ahead of an ad-hoc Politburo meeting in October, where further fiscal measures might be announced.

(With inputs from agencies.)