U.S.-listed shares of Chinese companies surged on Tuesday following Beijing’s announcement of its largest stimulus package since the pandemic, sparking optimism about renewed economic growth. The People’s Bank of China introduced a series of policy initiatives aimed at reviving demand, including interest rate cuts, reductions in mortgage rates, and new tools for boosting capital market funding.
Notable e-commerce stocks such as Alibaba Group, JD.com, and PDD Holdings saw increases between 5.4% and 8%. Chinese automakers Nio and Li Auto also rose by around 7%, while Tencent Music Entertainment Group climbed 14%. The stimulus announcement triggered a rise in mining stocks as well, with Freeport-McMoRan gaining over 6%, pushing the S&P 500 materials sector to a new high.
Casino operators with significant operations in Macau, including Wynn Resorts and Las Vegas Sands, rose 4% and 5.6%, respectively, amid hopes of recovering consumer demand in China. Luxury brands also benefited, with Estee Lauder gaining 5.6%. Exchange-traded funds (ETFs) focused on China experienced significant gains, with the iShares MSCI China ETF rising 6.4% and the KraneShares CSI China Internet ETF increasing nearly 7%.
The CSI 300 index enjoyed its strongest performance in four years but has dropped over 2% this year, contrasting with a 15.8% rise in global stocks. Investors, cautious of Chinese assets due to weak growth and a struggling property market, viewed the new stimulus measures as a potential short-term investment opportunity. Jay Woods, chief global strategist at Freedom Capital Markets, suggested this could be an opportune moment to buy into beaten-down Chinese stocks.
Despite the positive market response, uncertainty lingers over whether the stimulus will be sufficient to sustain growth, with analysts predicting further interventions. Colin Cieszynski, chief market strategist at SIA Wealth Management, noted that the latest measures likely mark the beginning rather than the conclusion of China’s stimulus efforts.
