China Stocks Climb as Fiscal Stimulus Bets Woo More Buyers
(Bloomberg) -- Chinese stocks’ rally stretched further, as talks of a fiscal stimulus boost turned early skeptics of the government’s support into believers.
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The CSI 300 Index rose more than 2.5% on Friday, making the week’s 13% gain so far the most since 2008. The broad rally was driven by about 270 of the index’s 300 members in the green, while a gauge of Chinese stocks in Hong Kong climbed 2.1%.
Following a blitz of stimulus measures introduced this week, sentiment of investors waiting for more vigorous fiscal support was fueled by a Reuters report that China is planning to issue 2 trillion yuan ($284.43 billion) of special sovereign bonds this year. The securities regulator’s guidelines to encourage companies to attract long-term investors fortified the optimism already brewing in the market.
Investors are experiencing a sharp sense of “FOMO” only days into one of China’s most daring policy campaigns in decades. That has sparked a frenzy of trading activity, reflected in the volume turnover reaching twice the amount from the days prior to the stimulus.
Morgan Stanley is among a slew of China watchers gradually turning bullish, with strategist Laura Wang and her colleagues seeing another 10% upside for the CSI 300 Index in the short term. Just days earlier, the Wall Street bank removed its preference for onshore stocks over offshore counterparts, citing a lack of supportive factors such as state buying.
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