(Bloomberg) -- Chinese stocks rallied, with the onshore benchmark gauge capping its best day in nearly six months, as anticipation grew for Beijing to bolster its struggling economy.
The CSI 300 Index rose 2.2% on Wednesday, the most since Feb. 6, with broad gains across major sectors. The Hang Seng China Enterprises Index jumped as much as 2.4%, ranking among the region’s top performers.
The rally in local shares followed a statement from the Politburo meeting this week, which pledged to prioritize boosting consumer spending and mentioned “counter-cyclical adjustments,” suggesting further easing measures.
“Probably some investors are now looking at it more from the half-full angle in anticipation of more counter-cyclical polices,” said Redmond Wong, a market strategist at Saxo Capital Markets in Hong Kong. Expectations that the Federal Reserve meeting later Wednesday will likely signal a September rate cut also boosted sentiment, he said.
Moreover, signs indicate that China’s so-called national team is again supporting the equity market. Contracts typically bought by state-related fund managers rose by 2% in some cases, an unusual move during the morning session, likely prompted by investors’ initial disappointment with the Politburo meeting reports, market participants said.
Whether Wednesday’s gain is a short-lived rebound or a sustainable re-rating remains to be seen. Policy-driven rebounds have had little staying power in recent years as the extent of the support has been too modest to revive the property market or boost consumer spending.
Down 0.6% in July, the CSI 300 gauge recorded its third straight month of loss and remained one of the worst performers among major equity indexes in the region. The Hang Seng gauge of Chinese stocks is on course for its steepest monthly decline since January.
“The Politburo meeting reignited hopes that Beijing may have more significant and meaningful measures planned to boost consumption, but the effects of these potential policies may not be enough to turn things around,” said Shen Meng, a director at Beijing-based investment bank Chanson & Co.
--With assistance from Winnie Hsu.
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