(Bloomberg) -- Chinese stocks rose as the top legislative body reviewed a proposal to refinance the hidden debt of local governments, and also after a gauge of services activity beat economists’ forecasts.
The CSI 300 Index climbed 2% as of the midday break, the biggest gain in more than two weeks, while the Hang Seng China Enterprises Index advanced as much as 1.4%. Both gauges ranked among the top performers in the region.
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.
“This is a good news because at least we will have local government bonds refinancing, and it will boost the expectation of other measures,” said Kenny Wen, head of investment strategy at KGI Asia Ltd. “But we still do not know the size and timing, the positive impact on today’s markets may be limited as investors will be in a ‘wait-and-see’ mode, especially ahead of the US election.”
Premier Li Qiang reiterated that China has relatively ample room for fiscal and monetary policy, and has conditions to ramp up countercyclical adjustments. The nation is confident about achieving its economic targets this year and its economic development going forward, Li said at the opening ceremony of a trade event.
The Caixin China services purchasing managers’ index rose to 52 in October from 50.3 the previous month, where a reading above 50 indicates expansion. The median forecast of economists surveyed by Bloomberg was 50.5.
The CSI’s gains follow a 1.4% jump on Monday, with some investors also attributing the recent advance to easing bets on Republican Donald Trump winning Tuesday’s US presidential election.
“The market currently believes that the probability of Trump being elected is decreasing,” said Jinghua Lin, an analyst at Capital Securities Corp. If Democrat Kamala Harris “is elected, the policy changes of the same party are expected to be relatively small, which will boost market sentiment. The market is still in a bullish mindset.”
--With assistance from Winnie Hsu and Mengchen Lu.
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