By Lisa Pauline Mattackal and Nikhil Sharma
(Reuters) – U.S.-listed shares of Chinese firms jumped on Tuesday, along with China-focused exchange-traded funds, casino companies and commodity-linked stocks, as Beijing’s largest stimulus measures since the pandemic raised hopes of renewed growth.
The People’s Bank of China unveiled a raft of policy measures, including interest rate cuts, a reduction in mortgage rates and new tools to boost capital market funding in a bid to revive demand in the world’s second-largest economy.
E-commerce firms Alibaba (NYSE:BABA) Group, JD (NASDAQ:JD).com and PDD Holdings were among some of the top gainers on Wall Street, rising between 5.4% and 8%.
Chinese auto manufacturers Nio (NYSE:NIO) and Li Auto (NASDAQ:LI) gained about 7% each, while shares of Tencent Music Entertainment Group (NYSE:TME) soared 14%.
Mining stocks also jumped as metal prices rose on hopes of increased demand. The S&P 500 materials sector rose 1% to a record high, with miner Freeport-McMoran rising over 6% to top the S&P 500.
Shares of casino operators Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS), which have a substantial presence in Macau, rose 4% and 5.6%, respectively, while Estee Lauder (NYSE:EL) rose 5.6%, tracking global luxury shares on hopes of renewed consumer demand in the key Chinese market.
Exchange-traded funds tracking Chinese markets also gained ground, with the iShares MSCI China ETF up 6.4% after the blue-chip CSI300 index notched its best day in four years. The KraneShares CSI China Internet ETF jumped nearly 7% to an over two-month high.
Investors have been wary of Chinese assets this year because of faltering growth, weak consumer demand, a severe downturn in the property market and the prospect of renewed trade tensions with the U.S.
The CSI 300 has slipped more than 2% year-to-date, versus a 15.8% rise in world stocks.
“If people are looking for opportunity, they may take a flyer on Chinese stocks because they’ve been so beaten down, this may prove to be a good short-term opportunity,” said Jay Woods, chief global strategist at Freedom Capital Markets.
The MCHI ETF has seen net outflows of over $2 billion over the past year, currently holding around $4.3 billion in assets under management, as per VettaFi data.
MORE STIMULUS AHEAD?
Global brokerages including Goldman Sachs and Citigroup cut their 2024 China economic growth forecasts earlier this month, with Citigroup citing the necessity for more fiscal stimulus.
Despite the latest measures, uncertainty remains over whether the stimulus is sufficient enough to drive growth, with several analysts expecting policymakers to step in again.
“This would seem to be much closer to the beginning of stimulus than the end of stimulus,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
