Chinese stock markets are having their best week in over a decade. Indeces of major stock markets in the country have seen their values soar over the past five days, with the Shanghai Stock Exchange Composite Index up over 21%, the CSI 300 Index up over 25%, and the Hong Kong Hang Seng Index up over 15%.
Here’s what’s driving those gains and also how they are affecting the stock prices of some of China’s biggest tech giants that trade on U.S. markets.
Why is China’s stock market soaring?
Most major markets in China have been on a tear for the past week after the Chinese government announced a series of measures aimed at stimulating the economy. Reuters says these measures are the most aggressive that Beijing has taken since the pandemic.
The stimulus measures were launched last Tuesday and include interest rate cuts and the lifting of restrictions on home buying or the easing of home buying restrictions in several major cities. The People’s Bank of China (PBOC) also introduced tools that make it easier for funds, brokers, and other institutions to get funding to buy stocks.
As Reuters notes, these stimulus measures are being implemented to turn around China’s sluggish economy and help the country achieve its economic growth target of 5% for the year.
And if Chinese markets are anything to go by, the stimulus package has definitely jump-started things in the right direction. On Monday, Chinese stocks had their largest single-day gains since 2008.
The SSE Composite Index, CSI 300 Index, and Hang Seng Index had all previously peaked in May of this year and have been almost steadily falling since then. But Beijing’s stimulus measures introduced last week have now seen those indices surge past their 2024 year highs.
The stimulus, however, isn’t just helping Chinese markets. The stock prices of some major Chinese tech giants that trade on U.S. markets are also surging.
Chinese stocks on U.S. markets rise, too
Major Chinese tech giants that trade on U.S. markets are also seeing strong gains since Beijing implemented its stimulus measures last week.
China’s tech and e-commerce juggernaut Alibaba Group Holding Limited (NYSE: BABA) has seen its share price surged over 19% in the past five days. Today in premarket trading, the stock is currently up 4.3% to to almost $112 per share. In February, it had traded below $68 per share.
China’s internet and artificial intelligence giant Baidu, Inc. (Nasdaq: BIDU), meanwhile, has seen its share price surge 19% in the past five days. As of the time of this writing, it’s up 3% in premarket to $108.40 per share. At the beginning of the month, Baidu was trading as low as $81 per share.
China’s e-commerce powerhouse JD.com, Inc. (Nasdaq: JD) is up a stunning 34% in the past five days alone. In premarket trading today, the stock is currently up over 6% to $42.31 per share. Back in March, JD had been trading at a low of just above $21 per share.
Where do Chinese stocks go from here?
Beijing’s stimulus measures seem to have had their desired effect—at least in these early days. Of course, it’s impossible to say whether these measures will continue to buoy the country’s stock markets and the broader economy. Only time will tell.
But one important thing to note is that tomorrow starts the Golden Week national holiday period in China. Golden Week runs from October 1-7 this year and it will see major stock markets like the Shanghai Stock Exchange closed during the entire time.
What will be interesting to see is how investors react once the holiday period is over and they’ve had sufficient time to digest China’s recent stock surge and what the government’s measures mean for the near future.
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