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Chinese markets dip ahead of crucial policy announcement

Stocks
2 min Read Oct 11, 2024
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Chinese stocks experienced a significant drop, underperforming other Asian markets as investors grew cautious. With a key government briefing on the horizon, all eyes are on Beijing’s next move regarding economic support. 

Amid this uncertainty, investors remain vigilant as they prepare to buy shares online, hoping to capitalise on any potential recovery once fiscal stimulus measures are clarified. The anticipated announcement is expected to shed light on how Beijing plans to support its slowing economy.

Chinese markets slump amid stimulus uncertainty

The CSI 300 Index, a benchmark for Chinese stocks, fell by as much as 2.4%, erasing Thursday's gains. In contrast, markets in Japan and South Korea saw moderate gains despite Wall Street's decline caused by rising core inflation. Australian stocks also edged down.

Investors are eagerly awaiting a briefing from China’s finance minister, scheduled for Saturday, which may unveil fresh fiscal stimulus measures. Analysts expect up to 2 trillion yuan (₹283 billion) in new support to help boost the faltering Chinese economy.

Market sentiment is driven by fear of disappointment

Market experts believe that the drop in Chinese stocks is partly due to fears of a potential letdown from the upcoming Ministry of Finance (MOF) briefing. Kieran Calder, head of equity research at Union Bancaire Privee in Singapore, said, "The risk of another disappointment is high if the MOF does not approve an extra budget or bond quota." This uncertainty is weighing heavily on investor sentiment.

U.S. markets and Federal Reserve impact

US equity futures made slight gains after the S&P 500 and Nasdaq 100 posted modest declines on Thursday. Treasury yields remained steady, with the two-year yield falling six basis points and the 10-year yield decreasing by one basis point.

Thursday’s data highlighted the challenge the Federal Reserve faces in controlling inflation. Core inflation in the US rose more than expected, signalling that progress in curbing rising prices has stalled. Despite this, several analysts, including David Donabedian from CIBC Private Wealth, still anticipate that the Fed will minimise rates by 25 basis points in both November and December.

Key takeaways

  1. Chinese stocks tumbled by 2.4% as investors grew cautious ahead of a key fiscal stimulus announcement.

  2. Japan and South Korea's markets performed better, while Australia saw minor losses.

  3. Investors expect Beijing to announce up to ₹283 billion in new stimulus measures.

  4. Fears of disappointment from the Ministry of Finance briefing have negatively impacted Chinese shares.

  5. Buying shares online remains a viable option as traders keep an eye on global market shifts.

Stay updated to explore opportunities and buy shares online as markets respond to these developments.