(Bloomberg) — Chinese stocks fell after a high-profile legislative meeting disappointed investors who had hoped for large-scale stimulus measures to boost the economy and end a deflationary cycle.
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The CSI 300 Index fell 0.4% as of 9:40 a.m. local time, while a gauge of Chinese stock trading fell more than 2% in Hong Kong. Both meters reduced the higher losses we saw in the open. The declines followed a 4.7% drop in the Nasdaq Golden Dragon China Index in the US on Friday.
Investors had pinned their hopes on the meeting of the Standing Committee of the National People’s Congress to provide new catalysts for the stock market, especially after Donald Trump’s presidential victory created new uncertainty over tariffs. Beijing announced a 10 trillion yuan ($1.4 trillion) program on Friday to help local governments tackle their hidden debts, but failed to provide new stimulus to boost consumption.
Chinese data released this weekend underlined the urgency of more efforts to boost growth, with consumer price growth remaining near zero and factory prices continuing to fall. UBS lowered its 2025 growth forecast for China after Trump’s election, expecting growth of “around 4%” for 2025, and a “significantly lower” pace in 2026.
“With the perceived emphasis on stabilization rather than stimulus, and with no measures to facilitate bank recapitalization and/or boost consumption, we think this will be a disappointment for equity investors, even though debt swap numbers were above expectation,” says Nomura. Streets of Holdings Inc. led by Chetan Seth wrote in a note.
Foreign companies are also pulling money from China as growth prospects become bleaker. Foreign direct investment fell by almost $13 billion in the first nine months of the year, a sign that some investors remain pessimistic even as Beijing implements stimulus measures aimed at stabilizing growth.
The CSI 300 Index, a benchmark for domestic stocks, fell 1% on Friday as traders grew jittery ahead of the NPC announcement. The gauge rose nearly 35% from its September low through October 8, but has moved largely sideways since then.
–With help from Winnie Hsu.
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