(Bloomberg) — Chinese stocks rallied, with the onshore benchmark gauge rising to the highest in almost a month, as a slew of positive headlines boosted investor sentiment.
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The CSI 300 Index rose 2.5% on Tuesday to close at the highest level since Oct. 8, while the Hang Seng China Enterprises Index advanced 2.6%. Both gauges ranked among the region’s top performers.
Optimism is running high after Beijing ramped up efforts to revive its economy, and a private survey showed that the nation’s services activity expanded at the fastest pace since July. The top legislative body has reviewed a proposal to move some off-balance-sheet debt of local governments to their official accounts, paving the way for the first mid-year increase in the borrowing limit since 2015.
Adding to the upbeat sentiment is Premier Li Qiang’s assessment that China has relatively ample room for fiscal and monetary policy, with conditions to ramp up countercyclical adjustments. All this helped Chinese equities to outperform their regional peers on a day when traders are gearing up for the US presidential race between Donald Trump and Kamala Harris.
“Chinese stocks are rallying on a wave of positive developments, driven by unexpectedly strong services activity and a shift in the US election outlook somewhat in favor of a Harris victory,” said Charu Chanana, chief investment strategist at Saxo Markets. Premier Li’s statements signaled Beijing’s continued commitment to support the economy, she added.
The National People’s Congress Standing Committee met on Monday to discuss the plan to raise local governments’ debt ceiling to swap out their hidden debt, according to the official Xinhua News Agency. The decision is intended to reduce the financial burden of local officials.
The Caixin China services purchasing managers’ index rose to 52 in October from 50.3 the previous month, the biggest jump since March last year, Caixin and S&P Global said Tuesday. The pace of expansion exceeded a median forecast of 50.5 by economists.
Chinese stocks have lost momentum after an earlier rally triggered by a policy blitz at end-September faded amid doubts about whether Beijing’s measures are enough to revive the economy. The CSI 300 Index surged nearly 35% from a September low through Oct. 8, but has fallen about 5% since.
