On September 26, 2024, China’s Shanghai Composite Index rose 3.6%, driven by the introduction of major economic support from the government. The Chinese central bank announced a 50-basis-point cut in the reserve requirement ratio (RRR), unlocking around 1 trillion yuan to boost market liquidity. This move is part of a larger effort to stabilize and energize the stock market.
Key Economic Measures Boosting Market Confidence
In addition to the RRR cut, the People’s Bank of China launched several tools designed to improve market liquidity. These include a stock market stabilization fund and a new asset-backed liquidity program for financial institutions. These measures are aimed at encouraging long-term capital inflows and rebuilding investor confidence in the stock market.
Asian Market Reaction
The positive impact of China’s measures spread to other Asian markets:
- Shenzhen Component Index jumped 4.36%.
- Hong Kong’s Hang Seng Index rose 4.1%.
Investors reacted enthusiastically to the new measures, pushing China’s Shanghai Composite above the 2800-point psychological level. This surge is seen as a sign of more growth opportunities, with the Chinese government expected to continue its supportive stance(Shanghai Government)(Yahoo Finance).
Crude Oil Prices Stay Stable
Oil prices dropped over 2% during Asian trading, extending their overnight decline. This came after a report from the Financial Times reported that Saudi Arabia, the leading OPEC member, was ready to increase production to regain lost market share.
What’s Next for Investors?
The market rebound presents new opportunities for investors, especially as more policy measures are expected. Monitoring key levels like the 2800-point mark on the Shanghai Composite and staying informed on further fiscal developments will be crucial for assessing the long-term outlook of both Chinese and global markets(Shanghai Government)(Yahoo Finance).
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