China’s stock rally slows as investors await more details on stimulus plans: Chinese officials speaking at a press conference expected to unveil details of its planned stimulus package failed to deliver the bold measures investors had hoped for, throwing a wrench in the country’s equity rally, Reuters reports. The country’s markets had initially opened strong following the country’s Golden-Week Holiday, climbing to their highest levels in over two years. Policymakers had announced last month the largest stimulus package since the pandemic late last month in a bid to kickstart the economy.

By the index: The Shanghai Composite closed 4.6% higher, while blue-chip CS1300 gained 5.9% as both benchmarks rolled back some of the double-digit gains seen earlier in the day. Meanwhile, Hong Kong’s Hang Seng Index fell 9.4%, marking its worst single-day drop since 2008 after raking massive gains in recent weeks, the newswire said. The exchange’s mainland properties subindex (HSMPI) recorded its largest-ever single-day drop, closing down 15.5%. However, analysts suggest the drop is in great part due to traders closing out their weekly gains.

Spillover: China-linked assets also took hits on the back of Tuesday’s reset. Australia’s AUD, the CNY, and iron ore were all in the red, Reuters said. Mining stocks and European luxury stocks also fell.

Stimulus details fell far short of what was hoped for: Economic planner chairman Zheng Shanje’s announcement that some CNY 200 bn (USD 28.6 bn) were being reallocated from next year’s budget to support projects and municipal government fell far short of what market watchers expected, the newswire said. Analysts had forecasted a fiscal package to the tune of CNY 3 tn (USD 425 bn), Bloomberg reports. The stimulus package outlined so far has been heavy on monetary easing, but the fiscal measures investors are waiting for have so far failed to materialize.

What investors are going to be looking for: “Ultimately for the rally to be sustainable, we need to see more fiscal policy and more measures to support the economy and the property market,” Reuters cites managing director of investment strategy at OCBC in Singapore Vasu Menon as saying.

Next up: China’s Finance Ministry is expected to make an announcement in upcoming days that may outline the fiscal shot in the arm everyone is waiting for. Morgan Stanley and HSBC Holdings have penciled in some CNY 2 tn in fiscal measures, with Citigroup citing a larger CNY 3 tn forecast.

MARKETS THIS MORNING-

It’s a mixed bag this morning, as Asian markets are just barely in the green in early trading, with Japan’s Nikkei leading the pack. Meanwhile, futures indicate US equity markets are on track to open in the red.

ADX

9,259

+1.2% (YTD: -3.3%)

DFM

4,429

+0.8% (YTD: +9.1%)

Nasdaq Dubai UAE20

3,776

+2.1% (YTD: -1.7%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.7% o/n

4.1% 1 yr

TASI

12,027

+1.0% (YTD: +0.5%)

EGX30

30,852

-3.0% (YTD: +23.9%)

S&P 500

5,751

+1.0% (YTD: +20.6%)

FTSE 100

8,191

-1.4% (YTD: +5.9%)

Euro Stoxx 50

4,949

-0.4% (YTD: +9.5%)

Brent crude

USD 77.56

-4.2%

Natural gas (Nymex)

USD 2.73

-0.5%

Gold

USD 2,635

-1.2%

BTC

USD 62,364

-1.1% (YTD: +47.4%)

THE CLOSING BELL-

The ADX rose 1.2% yesterday on turnover of AED 1.17 bn. The index is down 3.3% YTD.

In the green: Abu Dhabi National Co. for Building Materials (+7.4%), Apex Investment (+6.9%) and Al Dar Properties (+6.2%).

In the red: Aram Group (-9.9%), Ghitha Holding (-3.3%), and AD Ports (2.8%).

Over on the DFM, the index closed up 0.8% on turnover of AED 403.9 mn. Meanwhile Nasdaq Dubai closed down 1.7%.

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