Chinese stock markets opened positively on Monday, buoyed by hopes for a new stimulus plan from Beijing amidst U.S. election uncertainties. The Hang Seng index rose 0.14%, while the Shanghai composite and Shenzhen indices increased by 0.53% and 1.44%, respectively. Analysts suggest that the scale of China’s stimulus could depend on U.S. election results, with projections of a substantial budget aimed at supporting local governments. Additionally, oil prices climbed over 1% following OPEC+ members’ decision to extend production cuts.
Chinese Stock Markets Open Strong Amid U.S. Election Uncertainty
Chinese stock markets displayed a positive start on Monday morning, even as investors remained cautious ahead of the highly contested presidential election results in the United States. This optimism was partly fueled by the drafting of a new stimulus plan by Beijing, which experts believe could be influenced by the election outcome.
In Hong Kong, the Hang Seng index climbed by 0.14%, reaching 20,534.14 points shortly before 04:00 GMT. Meanwhile, the Shanghai composite index saw a rise of 0.53%, settling at 3,289.51 points, while the Shenzhen index surged by 1.44%, hitting 1,973.88 points. Other markets in Sydney, Seoul, Singapore, Taipei, Wellington, and Jakarta also experienced gains, albeit to a lesser degree. Notably, the Tokyo Stock Exchange remained closed for a public holiday.
China’s Stimulus Plans and U.S. Election Implications
Key officials of the Chinese Parliament, under the influence of the ruling Communist Party, commenced meetings to shape a stimulus plan. Analysts suggest that the scale of this initiative could pivot based on the results of the U.S. presidential election. In recent weeks, Chinese authorities have introduced various measures aimed at revitalizing the sluggish economy, including interest rate reductions—particularly for current mortgage loans—and relaxed restrictions on property purchases.
Following a stock market rally driven by expectations of a significant stimulus plan, market optimism has somewhat diminished. Promises and policies have been viewed as insufficient by investors who were anticipating robust investments.
Ting Lu, the chief economist for China at Nomura, noted that the U.S. election outcomes will influence the magnitude of Beijing’s stimulus strategy. With rising anti-Chinese sentiments in American politics, both presidential candidates have pledged to maintain pressure on Beijing. Donald Trump has particularly proposed imposing tariffs of 60% on all Chinese imports. Economists at Nomura project that lawmakers may approve an additional budget of around 1 trillion yuan (approximately 129 billion euros) this week, aimed primarily at supporting local governments burdened by debt.
Furthermore, analysts predict that Beijing will provide exceptional aid of 1 trillion yuan to banks to tackle non-performing loans accumulated over the past four years. Alicia Garcia Herrero from Natixis emphasized that much of this funding would be used to cover losses rather than stimulate economic growth. Heron Lim from Moody’s Analytics highlighted the need for more detailed proposals on how this additional funding would be allocated to address immediate economic challenges.
In another development, oil prices experienced a rise of over 1% on Monday, following an announcement from eight OPEC+ members, including Saudi Arabia and Russia, about extending their oil production cuts until the end of December. This extension, which includes countries like Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, aims to support oil prices amid uncertain demand, with U.S. WTI and Brent trading around $70. Ipek Ozkardeskaya, an analyst at Swissquote Bank, noted that the decision reflects the persistent downward pressure on prices globally, particularly due to weak demand outlooks. However, she expressed skepticism about the effectiveness of the OPEC+ strategy in producing significant results.