Chinese stocks surged to their highest level in two weeks on Friday, driven by growing hopes of fresh stimulus measures ahead of the Central Economic Work Conference next week.
The CSI 300 Index, which tracks onshore stocks, rose as much as 1.9%, led by financial and technology shares.
Meanwhile, a gauge of Chinese stocks traded in Hong Kong advanced by 2.1%, reflecting widespread optimism.
This marked the highest level for the CSI 300 since November 21, as investors bet that Beijing will introduce policies aimed at reviving a slowing economy.
“Investors are looking forward to next week’s Central Economic Work Conference and the possibility of further reductions in the reserve requirement ratio by the Chinese central bank this month,” said Kenny Ng, a strategist at China Everbright Securities International.
By 1:19 pm, GMT+8, the index had given up some of the gains and was 1.27% higher.
Stimulus bets intensify ahead of policy meeting
The Central Economic Work Conference, an annual closed-door meeting of China’s top policymakers, is expected to map out economic targets and stimulus plans for 2025.
Anticipation of significant announcements at the event has reignited interest in Chinese equities, which had struggled to sustain a recent rally.
Adding to the optimism, global investment banks, including Goldman Sachs and Morgan Stanley, predict that the People’s Bank of China (PBOC) will implement aggressive interest-rate cuts in 2025.
These cuts, projected at 40 basis points by some analysts, could be the largest in over a decade.
Billy Leung, an investment strategist at Global X ETFs, noted that local traders are discussing the possibility of rate cuts as high as 60 basis points next year.
Asia’s equities recover partially
The rebound in Chinese stocks helped Asian equities gauge reverse losses to edge 0.1% higher on Friday.
Gains in China offset declines in Japan, South Korea, and Australia, where markets remained subdued after overnight losses on Wall Street.
The S&P 500 and the tech-heavy Nasdaq 100 dropped 0.2% and 0.3%, respectively, on Thursday, snapping a five-session winning streak.
Market sentiment in the US was dampened by rising jobless claims, which hit a one-month high, even as attention turned to Friday’s pivotal nonfarm payrolls report.
Political stability aids South Korea’s markets
In South Korea, the won pared earlier losses following assurances from the Army Special Forces Commander that there would be no second martial law or troop deployments.
Despite this, the country’s benchmark stock index fell 0.7%.
To address recent volatility in its currency, South Korea announced plans to enhance after-hours liquidity in the won.
The yen remained steady against the dollar after some fluctuations, following a record increase in base salaries for regular workers in Japan.
Jobs report to set the tone for markets
Friday’s nonfarm payrolls report has emerged as a key market driver amid mixed economic signals in the US.
Economists expect a rebound in November, with 220,000 jobs likely added after hurricanes and labor strikes weighed on October’s figures.
Market participants are also eyeing how the data will influence Federal Reserve policy.
Treasuries remained steady in Asia, with long-bond yields slightly lower.
Swap trading suggests a 70% likelihood of a quarter-point rate cut at the Fed’s December meeting.
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