JCGI

JCGI

“The big story on the markets was the sharp rally in Chinese stocks after a state-backed initiative to stir up interest in equities,” says Russ Mould, Investment Director at AJ Bell.

“The Hang Seng advanced 4% and the SSE jumped 3.2%, some of the biggest one-day gains we’ve seen on the Chinese market in a long time. The Hang Seng Tech index did even better, soaring by 7%.

“A state-owned investment fund indicated it would continue to buy up shares in what looks like a concerted effort to breathe some new life back into Chinese equities after they fell out of favour. The securities regulator also pledged to encourage more long-term funds to buy shares and to encourage companies to buy back more of their own shares.

“A clampdown by the Chinese government on regulation and data protection previously caused jitters on the market and that was followed up by a flop post-Covid economic reopening. With signs the country is finding it harder to sustain strong levels of economic growth, it’s no wonder investors lost interest in the country.

“Investment wisdom suggests the best time to buy equities is when everyone has lost interest, so we’ve seen a few brave outfits take a contrarian view on China in recent months and they will certainly welcome today’s price action. The big unknown is whether this effective stimulus initiative is just a short-term boost or enough to trigger a sustained revival in Chinese markets.