China ADRs, miners, casino shares leap as Beijing launches fresh stimulus measures

Tencent Music Entertainment

24/09/2024 16:16

By Lisa Pauline Mattackal and Nikhil Sharma
       Sept 24 (Reuters) - U.S.-listed shares of Chinese firms
jumped on Tuesday, along with China-focused exchange-traded
funds, casino companies and commodity-linked stocks, as
Beijing's largest stimulus measures since the pandemic raised
hopes of renewed growth.
        The People's Bank of China unveiled a raft of policy
measures, including interest rate cuts, a reduction in mortgage
rates and new tools to boost capital market funding in a bid to
revive demand in the world's second-largest economy. 
  
        E-commerce firms Alibaba Group  BABA.N , JD.com  JD.O 
and PDD Holdings  PDD.O  were among some of the top gainers on
Wall Street, rising between 5.4% and 8%. 
  
    Chinese auto manufacturers Nio  NIO.N  and Li Auto  LI.O 
gained about 7% each, while shares of Tencent Music
Entertainment Group  TME.N  soared 14%. 
    Mining stocks also jumped as metal prices rose on hopes of
increased demand. The S&P 500 materials sector  .SPLRCM  rose 1%
to a record high, with miner Freeport-McMoran  FCX.N  rising
over 6% to top the S&P 500  .SPX .  
    Shares of casino operators Wynn Resorts  WYNN.O  and Las
Vegas Sands  LVS.N , which have a substantial presence in Macau,
rose 4% and 5.6%, respectively, while Estee Lauder  EL.N  rose
5.6%, tracking global luxury shares on hopes of renewed consumer
demand in the key Chinese market. 
    Exchange-traded funds tracking Chinese markets also gained
ground, with the iShares MSCI China ETF  MCHI.O  up 6.4% after
the blue-chip CSI300  .CSI300  index notched its best day in
four years. The KraneShares CSI China Internet ETF  KWEB.K 
jumped nearly 7% to an over two-month high. 
    Investors have been wary of Chinese assets this year because
of faltering growth, weak consumer demand, a severe downturn in
the property market and the prospect of renewed trade tensions
with the U.S.
    The CSI 300 has slipped more than 2% year-to-date, versus a
15.8% rise in world stocks  .MIWD00000PUS . 
    "If people are looking for opportunity, they may take a
flyer on Chinese stocks because they've been so beaten down,
this may prove to be a good short-term opportunity," said Jay
Woods, chief global strategist at Freedom Capital Markets. 
    The MCHI ETF has seen net outflows of over $2 billion over
the past year, currently holding around $4.3 billion in assets
under management, as per VettaFi data. 
    
    MORE STIMULUS AHEAD? 
    Global brokerages including Goldman Sachs and Citigroup cut
their 2024 China economic growth forecasts earlier this month,
with Citigroup citing the necessity for more fiscal stimulus.  
    Despite the latest measures, uncertainty remains over
whether the stimulus is sufficient enough to drive growth, with
several analysts expecting policymakers to step in again. 
    "This would seem to be much closer to the beginning of
stimulus than the end of stimulus," said Colin Cieszynski, chief
market strategist at SIA Wealth Management.

    

 (Reporting by Lisa Pauline Mattackal in Bengaluru; Editing by
Anil D'Silva)
 ((LisaPauline.Mattackal@thomsonreuters.com;))