China’s government recently announced a comprehensive stimulus package to boost economic growth and counter deflationary pressures. The measures include issuing 2 trillion yuan ($284 billion) in special sovereign bonds, with 1 trillion yuan allocated to subsidize consumer goods renewals and business equipment upgrades. Households with two or more children will also receive about 800 yuan per child.
Furthermore, China plans to inject another 1 trillion yuan into its biggest state banks to enhance their lending capacities. This move is designed to preserve the banks’ lending capabilities despite declining property prices. These are fiscal stimulus measures that can stabilize the banks,” said chief economist at Grow Investment Group. “It will ensure that the banks’ lending capability remains unaffected.”
Several China-based stocks surged due to the optimistic outlook on economic growth.
China’s stimulus package spurs optimism
Alibaba Group Holding Ltd. was up 8.16% at $103.26, JD.com Inc. was up 13.5% at $37.68, and PDD Holdings Inc. was up 9.7% at $125.05.
Chinese electric vehicle stocks also responded positively, with Nio Inc up 5.31% at $5.95, Li Auto Inc up 10.1% at $26.12, and Xpeng Inc up 12.9% at $11.78. Billionaire David Tepper revealed that he is significantly increasing his investments in Chinese equities. “I didn’t know that they were going to bring out the big guns,” Tepper mentioned in an appearance on CNBC’s “Squawk Box.” As a result, Tepper indicated that his firm, Appaloosa Management, has escalated its holdings in companies with substantial exposure to China, such as Wynn Resorts and Las Vegas Sands Corp.
Even though Tepper did not disclose specific stocks, he highlighted that the valuations of many China-based companies are extremely low, presenting an opportunity for investment given their double-digit growth rates. China’s comprehensive stimulus package appears to have restored investor confidence, particularly in stocks and sectors with significant exposure to the Chinese market. With promises of substantial fiscal support to meet growth targets, the global financial community will closely monitor how these measures impact the Chinese economy and international markets.
