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Chinese stocks and bond prices rose on Tuesday after the country’s leaders promised to implement “moderately accommodative” monetary policy to revive economic growth in the world’s second-largest economy.
The CSI300 stock index rose as much as 3.3% on the move and was later up 1.4%, while China’s benchmark 10-year bond yield fell 5 basis points to 1.0% in morning trading. ．86%, a record high. Interest rates were lower as investors bet on further rate cuts from the central bank. Bond prices move inversely to yields.
The rally came as the Communist Party’s decision-making body, the Politburo, chaired by President Xi Jinping, vowed to implement “non-traditional” policies to boost growth and stabilize the stock market and real estate sector. It was held in response.
Policymakers also pledged on Monday to adopt “more aggressive” fiscal policy and hinted that government support could increase. The leaders also vowed to “strongly expand consumption.”
Investors are looking for further signs that the Chinese government, which announced several stimulus measures in September, is stepping up efforts to boost consumer demand as the economy has been under deflationary pressures for much of this year. .
China’s imports fell 3.9% in November from a year earlier, according to trade data released on Tuesday, the sharpest decline since February, which analysts said reflected weak demand. Consumer prices rose just 0.2% year-on-year in November, according to inflation figures released on Monday.
“The contraction in imports is consistent with the weakness in (consumer price) statistics,” Pinpoint Asset Management’s Jiwei Zhang said in a note. “Yesterday’s Politburo meeting hinted at (boosting) domestic demand next year. Markets are anxiously awaiting details of what the government will do concretely.”
China’s exports rose 6.7% in November compared to the same month last year, lower than analysts expected in dollar terms.
“Although export growth slowed sharply last month, we do not believe this signals an end to China’s recent export boom,” Capital Economics said in a note. “We expect exports to accelerate again in the coming months, supported by improved export competitiveness and upfront tariffs for exporters.”
Donald Trump’s election victory last month has heightened concerns about tariff increases. China’s trade surplus with the United States in November was $34.9 billion, widening from $33.5 billion the previous month.
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Analysts at Bank of America said the market interpreted the Politburo’s comments as indicating a stronger policy stance beyond what was announced in September.
The conference’s report “helps ensure that top leaders are fully aware of and seriously addressing the weakness in aggregate demand beyond local government fiscal constraints,” they said.
Dalian iron ore futures rose as much as 3.9% on Tuesday, the biggest gain since September, when Chinese authorities launched a series of economic stimulus measures.
Demand for iron ore, a steel product, is closely related to China’s construction and investment growth.
Additional reporting by William Sandland in Hong Kong