Today, the Hong Kong and Shanghai stock exchanges experienced significant gains following actions by Chinese authorities to halt a prolonged market downturn.
These markets had been among the poorest performers globally since the beginning of the year, with investor concerns centred on the continued weaknesses in China’s economy, the second-largest in the world.
Patrick O’Hare, an analyst at Briefing.com, commented, “Today, the Shanghai Composite saw a break in the clouds after a period of darkness.”
The Chinese government, alarmed by the market slump that erased trillions in value, has introduced a series of measures aimed at stemming the decline.
Hong Kong’s market ended 4% higher, buoyed by a rally in major tech companies like Alibaba, JD.com, and XD Inc. Meanwhile, the Shanghai Composite Index climbed 3.23%.
This uptick followed an announcement by Central Huijin Investment, a government entity holding stakes in major financial institutions, that it would boost its investments in funds.
Subsequently, the China Securities Regulatory Commission declared its intention to encourage more involvement from long-term funds and to prompt publicly traded companies to increase their share buybacks.
Neil Wilson, the chief market analyst at Finalto Trading Group, observed, “The Chinese authorities are intervening following a wave of sell-offs that drove shares in mainland China to multi-year lows.”
However, analysts caution that while these measures might offer temporary respite, the government must tackle deep-rooted issues in the economy, especially in the real estate sector, to rebuild confidence.
