(Bloomberg) — Chinese shares rose, with the onshore benchmark rising to its highest level in nearly a month, while a slew of positive headlines boosted investor sentiment.
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The CSI 300 Index rose 2.5% on Tuesday to close at its highest level since October 8, while the Hang Seng China Enterprises Index rose 2.6%. Both meters were among the top performers in the region.
Optimism is high after Beijing stepped up efforts to revive its economy, with a private survey showing the country’s services activity growing at the fastest pace since July. The top legislative body has revised a proposal to move some of local governments’ off-balance sheet debt to their official accounts, paving the way for the first six-month increase in the borrowing limit since 2015.
The optimistic sentiment is further reinforced by Premier Li Qiang’s assessment that China has relatively much room for fiscal and monetary policy, with conditions to increase countercyclical adjustments. All this helped Chinese stocks outperform their regional peers on a day when traders prepare for the US presidential race between Donald Trump and Kamala Harris.
“Chinese stocks are rising on a wave of positive developments, driven by unexpectedly strong activity in the services sector and a shift in the US election outlook, somewhat in favor of a Harris win,” said Charu Chanana, chief investment strategist at Saxo Markets. Prime Minister Li’s statements were a sign of Beijing’s continued commitment to supporting the economy, she added.
The Standing Committee of the National People’s Congress met on Monday to discuss the plan to raise the debt ceiling of local governments to pay off their hidden debts, the official Xinhua news agency said. The decision is intended to reduce the financial burden on local officials.
The Caixin China services purchasing managers index rose to 52 in October from 50.3 the month before, the biggest jump since March last year, Caixin and S&P Global said on Tuesday. The growth rate exceeded economists’ average forecast of 50.5.
Chinese stocks have lost momentum after an earlier rally sparked by a policy blitz in late September faded amid doubts over whether Beijing’s measures are enough to revive the economy. The CSI 300 Index rose nearly 35% from its September low through October 8, but has fallen about 5% since then.
