23rd Jan 2024 16:25
(Alliance News) - Markets in China got a boost overnight on Tuesday, whilst China-exposed shares edged higher in London, amid hope that China may unveil measures to boost investor confidence.
In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong jumped 2.6%.
"The Hang Seng enjoyed its best day of 2024 overnight. Authorities in Beijing are mulling support measures to stem the pain facing China’s struggling stock market," said Victoria Scholar, head of investment at interactive investor.
In London, China-sensitive stocks edged higher. Prudential was up 2.4% and Standard Chartered rose 4.8%. Miners Glencore and Anglo American were up 1.8% and 2.4, respectively.
Chinese authorities are considering a package of measures to support the slumping stock market, Bloomberg reported on Tuesday, citing people familiar with the matter.
Policymakers are seeking to mobilise about CNY2 trillion, around USD278 billion, mainly from the offshore accounts of Chinese state-owned enterprises, Bloomberg reported. The news agency added that this is part of a stabilisation fund to buy shares onshore through the Hong Kong exchange link.
Michael Hewson, chief market analyst at CMC Markets UK, said the package "could come as soon as next week."
Meanwhile, analysts at ING said the Bloomberg report has "boosted" risk sentiment.
"The rescue plan should be mostly targeted to the Hang Seng stock exchange, which has sharply underperformed global equities of late. This is a strong message that conveys Beijing’s intention to artificially support Chinese markets in spite of the deteriorating economic outlook in the region, and it is reported that other measures are under consideration," ING commented.
China has been struggling in recent months. The country began dismantling its zero-Covid restrictions in December 2022 after almost three years, which allowed the economy to rebound. But that recovery has been hampered by weak consumer and business confidence, a persistent housing crisis, record youth unemployment, and a global slowdown which is weighing on demand for Chinese exports.
On Monday, China's central bank left its key interest rates unchanged, as expected by the market.
The People's Bank of China maintained the one-year loan prime rate, which serves as a benchmark for corporate loans, at 3.45%. It had been cut from 3.55% in August, in an attempt to counter the post-Covid growth slowdown in the world's second-largest economy.
By Sophie Rose, Alliance News senior reporter
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