Chinese stocks surged to their largest single-day gains in 16 years on Monday, with domestic A-shares reaching record turnover levels, as investors rushed to capitalize on a strong rally driven by Beijing's latest round of stimulus measures.
The CSI300 blue-chip index is now up nearly 30% from its February trough, which by some market definitions suggests it is in a bull market, but much of the gains have happened very quickly and over a few sessions since last week.
Many traders, fearing they may miss out on the upsurge ahead of a week-long holiday starting on Tuesday, helped lift the CSI300 index 8.5% at the close, taking its five-day gain to over 25% – the strongest on record.
The broader Shanghai Composite Index meanwhile recorded a total turnover of 1.17 trillion yuan ($166.84 billion) and surged 8.1%.
That took its five-day gains since last Tuesday, when Beijing began rolling out stimulus measures to arrest a slowdown in the broader economy, to 21.4%, the strongest since 1996.
It was also the best single-day percentage gain for both the CSI and SSEC indexes since 2008.
Similarly, the smaller Shenzhen index soared 11% and recorded a turnover of 1.4 trillion yuan.
The blistering rally in Chinese stocks has come on the back of last week's most aggressive stimulus measures announced by Beijing since the pandemic – ranging from outsized rate cuts to fiscal support – in an attempt to shore up its ailing economy.
Particularly in a boost for stocks, the People's Bank of China (PBOC) also introduced two fresh tools to shore up the capital market, one of which includes a swap program allowing funds, insurers, and brokers easier access to funding in order to buy stocks.
That lit a fire under beaten-down Chinese equities that had been languishing near multi-year lows as recently as early this month, as investors fretted over China's growth prospects.
"It's really a big turnaround. The policies are so intensive. We have never seen such clear instruction to stop housing prices declining and support the stock market," said Dickie Wong, executive director of research at Kingston Securities.
"Many foreign investors are afraid of missing out, local retail investors are asking me what they should add to, institutional investors are rushing to the market to catch up, and the large inflows have pushed the Hang Seng Index up to 21,000."
Hong Kong's Hang Seng Index, which advanced 2.4% on Monday, is now up roughly 24% for the year, dethroning Taiwan to become Asia's best-performing stock market.
Adding to the positive momentum was news on Sunday from China's central bank saying that it would tell banks to lower mortgage rates for existing home loans before Oct. 31, as part of sweeping policies to support the country's beleaguered property market.
The teetering sector has long accounted for around a quarter of gross domestic product and experienced dazzling growth for two decades.
However, a years-long housing slump has become a major impediment to growth as the country's leadership eyes a target of around 5% this year – an objective analysts say is optimistic given the many headwinds the economy faces.
On Monday, state news agency Xinhua said that China's six major national commercial banks – including the Industrial and Commercial Bank of China, the Agricultural Bank of China and the Bank of China – had agreed to "adjust" mortgage rates for existing home loans.
This week will also see three of China's biggest cities ease restrictions to make it easier for people to buy homes.
The southern megacities of Guangzhou and Shenzhen – home to a combined 37 million people – said prospective homebuyers would no longer be vetted for their eligibility.
In the center of Guangzhou, where people were previously barred from owning more than two homes, there will no longer be any restrictions on how many a person can buy, the city said.
And in the eastern economic powerhouse of Shanghai – the country's richest city – authorities said they would lower the minimum down payments on a home to 15% from 20% starting on Tuesday.
Restrictions on people originally hailing from other parts of China on buying homes in the megacities will also be relaxed, the new rules said.
Over 20 cities have abolished home purchase restrictions since the beginning of last year, according to an Agence France-Presse (AFP) tally.
Meng Xiaosu, a former government official dubbed "the father of China's real estate industry" for spearheading the country's property reform policies in the 1990s, said more cities would likely follow suit.
"This is how China can build a new development model for the property sector," he told AFP.
"We are beginning to see the impact on economic development of imposing inappropriate restrictions on the sector."
That catapulted shares of property companies on Monday, with mainland-listed property stocks advancing 8.2%, while the Hang Seng Mainland Properties Index charged 6.4% higher.
Kaisa shares rocketed almost 60%, Sunac up more than 16%, and Fantasia piling on more than 30%.
Investor optimism that the latest measures could help revive China's anemic domestic consumption also lifted shares of consumer staples up 8.8%, its biggest daily percentage gain in 16 years.
For the month, the CSI300 index clocked a gain of 21%, its best performance since December 2014. The Shanghai Composite Index similarly ended September with a 17% increase, its most since April 2015.
The Hang Seng Index had its best month since November 2022 with a 17% rise, after delivering its biggest weekly rise since 1998 last week, and fifth largest in the last half-century.
Mainland financial markets will be closed Oct. 1-7 for National Day holidays.
