Chinese ADRs and ETFs fell in premarket trading after another much-anticipated policy briefing failed to deliver the kind of pro-growth stimulus that investors had been hoping for.
KE Holdings fell 7%; YINN fell 6%; Li Auto fell 4.3%; XPeng fell 4%; Nio fell 3%; JD.com fell 2.5%; PDD Holdings fell 2%; Alibaba fell 1%.
China will nearly double the loan quota for unfinished residential projects to 4 trillion yuan ($562 billion), Housing Minister Ni Hong said at Thursday’s press briefing, where he largely reiterated previous steps taken by the government. That’s after a newspaper run by the housing ministry had hinted Beijing will “hit a heavy punch combo,” setting market expectations high.
The market response suggests authorities face a high bar to satisfy traders and revive a faltering rally. Skepticism has been creeping back in as Beijing has refrained from unleashing fiscal firepower that matches the surprise offered by the central bank’s policy blitz in late September. The briefing came as another let-down after those by the Ministry of Finance and the state economic planner triggered wild market swings with scant spending details earlier this month.
“Equity investors are looking for big headline numbers to drive stocks up further, while the government is more focused on bringing the economy and housing markets gradually back to health,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “As long as there’s such a mismatch in expectations, all press briefings will inevitably be disappointing.”
Data due Friday is set to show the economy expanded 4.5% in the third quarter from a year ago, according to economists surveyed by Bloomberg. That would be the least since March 2023, intensifying a debate as to whether the stimulus measures announced so far will be enough to turn around the moribund economy.
Some investors are waiting for the second leg of the rally to resume as momentum quickly loses steam. A delay in market revival would seem like a deja vu to traders who have been burnt by multiple false dawns over the past few years.
“While it cannot be said that no new policy measures have been introduced at all, they can hardly make the market feel any real breakthrough has been made,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co. “Investor confidence continues to shrink and the sentiment remains low, which will add pressure for Beijing to ramp up policy support in the future.”
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