Investors await China’s NPC meeting for catalysts to sustain US$4 trillion stock rally

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Investors expect China’s legislators to inject stimulus to propel a rally that has already added trillions to markets on the mainland and Hong Kong

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The standing committee of the National People’s Congress will convene in Beijing from November 4 to 8. Photo: Xinhua

Zhang Shidongin Shanghai

Published: 7:30am, 30 Oct 2024Updated: 7:43am, 30 Oct 2024

Investors are waiting for a crucial legislative gathering in Beijing next week, which is widely expected to endorse fiscal support to rejuvenate the economy and stoke a rally that has recently added US$4 trillion to markets in China and Hong Kong.

The standing committee of the National People’s Congress (NPC) will convene from November 4 to 8, with legislators reviewing a raft of issues, including state asset management and law amendments, according to Xinhua.

Investors have high expectations from the NPC meeting, particularly after stock benchmarks in China and Hong Kong have jumped more than 20 per cent since late September, making them the best performers globally in the period. The momentum has weakened recently, as investors have adopted a wait-and-see attitude.

For the bull run to sustain, the NPC will need to approve fiscal stimulus worth at least 2 trillion yuan (US$280 billion) to complement the monetary easing unveiled in September, according to several top brokerages.

“If the scope of the fiscal policies exceeds expectations, China’s stocks will probably break out of the sideways trading pattern and restart an uptrend,” said Huang Hongwei, an analyst at Chasing Securities.

Chinese stocks have surged more than 20 per cent in the last one month. Photo: Shutterstock

The NPC meeting comes at a time when the appetite for Chinese stocks has returned among global fund managers who fled the market amid disappointment over Beijing’s piecemeal measures.