(Bloomberg) — Chinese stocks fluctuated in early trading on Monday as investors assessed the potential impact of the support measures announced by the finance ministry over the weekend.
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The CSI 300 Index swung between a gain of 1.7% and a loss of 0.4%. It capped its worst week since late July on Friday. A Bloomberg Intelligence gauge of Chinese developers was little changed after rallying more than 4%.
The swings underscore caution as traders await details of fiscal stimulus. Finance Minister Lan Fo’an promised new measures to support the property sector and hinted at greater government borrowing at the Saturday briefing, but fell short of giving a headline dollar figure. Revved up fiscal spending is seen as holding the key to sustaining the stock market rally ignited by the central bank’s stimulus blitz in late September.
“Sentiment is back to being hopeful, but will also get into a seeing-is-believing mode to await actual numbers and more details on consumption and property measures, which were lacking,” Xin-Yao Ng, an investment director at abrdn Asia Ltd. “The MOF did everything within their purview to give market hope to look forward to.”
An index of Chinese shares listed in Hong Kong fell more than 2%, reversing an earlier gain.
Local governments will be allowed to use special bonds to buy unsold homes, Lan and his deputies said at the Saturday briefing, without giving an amount. Lan hinted at room for issuing more sovereign bonds and vowed to relieve the debt burden of local governments, signaling a possible rare revision to the budget that could come in the next few weeks.
Prior to the weekend, investors and analysts surveyed by Bloomberg had expected China to deploy as much as 2 trillion yuan ($283 billion) in fresh fiscal stimulus on Saturday, including potential subsidies, consumption vouchers and financial support for families with children. Market volatility had risen in the run up to the MOF briefing, with the CSI 300 Index sliding 3.3% last week.
Meanwhile, officials from various Chinese departments kicked off another briefing on Monday to discuss stepping up policy support for businesses.
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