Chinese financial stocks climb on new wave of stimulus measures

China’s financial stocks rallied in Tuesday morning trading after the country’s central bank unveiled a sweeping stimulus package aimed at countering the waning economic outlook and restoring market confidence.

Xinyuan Real Estate (NYSE:XIN) +17.7%, Futu Holdings (NASDAQ:FUTU) +11%, Ping An Insurance (OTCPK:PNGAY) +8.6%, UP Fintech Holding (NASDAQ:TIGR) +8.4%, Lufax Holding (NYSE:LU) +7.8%, KE Holdings (NYSE:BEKE) +6.4%, LexinFintech Holdings (NASDAQ:LX) +5.1%, Qifu Technology (NASDAQ:QFIN) +4%, Qudian (NYSE:QD) +3.6%, FinVolution Group (NYSE:FINV) +2.9% and Fanhua (NASDAQ:FANH) +2.3%, all gapped up at 10:19 a.m. ET in the U.S.

The stimulus package buoyed the broader Chinese stock market, with the Shanghai Composite (SHCOMP) climbing 4.2% at the time of writing. But it’s still down nearly 4% this year and about 8% from a year ago. The Hang Seng Index (HSI) recorded an even bigger swing, accelerating 6.3%.

The People’s Bank of China slashed its reserve requirement ratio to the lowest level since at least 2020, as well as trimming its main short-term interest rate. The package also targeted the nation’s beleaguered property market, with measures to lower overall mortgage costs and a de-stocking program that eased rules for second-home purchases.

Over the long-term, though, 22V Research does not “expect a large departure from Xi’s strategy of restrained stimulus and focus on manufacturing and industry over property and the household sector,” analyst Dennis DeBusschere wrote in a note to clients.

“Short-term, though, sentiment has been so bad that signs of increased urgency could lead to a nice reversal” in Chinese equities, he added.