China's Stock Market Boost: A Swap Program Sparks Optimism

China and Hong Kong stocks climbed following the People's Bank of China's new swap programme, injecting liquidity into the market. The initiative aims to stabilize stocks despite a recent dip. Investors eagerly anticipate further policy announcements, with hopes for fiscal stimulus to support ongoing economic recovery efforts.

China and Hong Kong stock markets experienced gains on Thursday, fueled by the People's Bank of China's (PBOC) new swap programme aimed at reinforcing the stock market. The initiative, accepting applications for a 500-billion-yuan swap facility, seeks to inject liquidity into the financial sector. Investors are hopeful for more policy directions in the coming days.

The blue-chip CSI300 Index and Shanghai Composite Index in China both rose over 1%, while Hong Kong's Hang Seng index saw a significant 3% increase. Lorraine Tan of Morningstar suggested the move could ease funding for trades, though the rally's endurance relies on policies addressing excess housing inventory and consumer expenditure.

Market participants, including Stephen Chang of PIMCO, are closely watching for fiscal stimulus announcements from the finance ministry on Saturday. A fiscal package, possibly capped at 3% of GDP annually, is anticipated to stabilize the economy further. Meanwhile, consumer staple and energy sectors led gains in China, while property and securities shares surged in Hong Kong.

(With inputs from agencies.)