Written by Cláudio Afonso | LinkedIn | X
U.S.-listed shares of several Chinese companies dropped sharply in premarket trading on Tuesday after a recent rally, driven by stimulus expectations, began to lose momentum as investors now anticipate a weaker financial stimulus.
Zheng Shanjie, chairman of China’s National Development and Reform Commission (NDRC), spoke at a highly anticipated press conference on Tuesday where he warned that “the downward pressures on China’s economy is also increasing”.
However, Zheng Shanjie says he is “fully confident” the country will achieve its full-year economic and social targets.
The chairman announced that China will use 100 billion yuan ($14.1 billion) from the 2025 budget raising concerns on a smaller stimulus than expected by investors.
Hong Kong’s Hang Seng Index closed down 9.4 percent.
In the U.S. premarket session, Chinese carmaker Nio sank 14 percent, while XPeng and Geely-backed Zeekr each fell by 12 percent. Li Auto also saw its shares drop over 12 percent at 04:40 AM eastern time.
Tech and media stocks also fell with Alibaba dropping nearly 9 percent, Tencent about 12 percent and Bilibili more than 17 percent.
Despite assurances from officials, market sentiment remained cautious. NDRC Deputy Head Zhao Chenxin noted that the economy had been “stable” through the first three quarters, as reported by the South China Morning Post, but the lack of substantial new stimulus appeared to weigh on investor confidence.
Last month, the People’s Bank of China (PBOC) announced several stronger-than-expected key measures to stimulate the economy and support liquidity marking the strongest stimulus since the Covid-19 pandemic in 2020.
Pan Gongsheng, governor of the PBOC, said the central bank would set up a swap facility for securities, fund, and insurance firms allowing eligible institutions to access liquidity from the central bank by pledging assets.
Pan said the policy is expected to significantly improve these institutions’ ability to raise funds and increase their shareholdings.
Written by Cláudio Afonso | LinkedIn | X
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