The Hang Seng index in Hong Kong experienced a significant surge on Tuesday, bouncing back from 14-month lows. This upward momentum also lifted Chinese bourses, following reports that Beijing is contemplating a $278 billion package to bolster the country’s stock market.
The potential move by China’s policymakers comes in response to Premier Li Qiang’s statement on Monday, emphasizing the adoption of forceful and effective measures to restore market confidence.
News of the proposed support package provided a boost to the Hang Seng index, resulting in a 2.6% increase on Tuesday. Additionally, the Shanghai Composite rose 0.5%.
It is noteworthy, however, that some analysts remain skeptical about the sustainability of a rally in Chinese equities solely based on this fund.
“While the reported fund size is meaningful, it is important to recognize that it pales in comparison to the tremendous losses of $6 trillion witnessed in Chinese and Hong Kong shares since their peak in 2021,” commented Kathleen Brooks, research director of XTB.
“Therefore, it may require a more substantial package to achieve long-term stability in the Chinese share market,” Brooks added.