Wednesday 18 November 2020 7:38 am

Chinese stocks climb on prospect of fiscal stimulus

Chinese stocks edged higher on Wednesday after the Chinese government hinted at additional stimulus to aid the economic recovery. 

Premier Li Keqiang helped to ease investor nerves that authorities might abandon policies to prop up the economy, which has been devastated by the pandemic. On Tuesday night he told state radio that China will promote economic growth to a “reasonable” range while pursuing higher quality development. 

Read more: FTSE 100 and US stocks slip as investors focus on virus

Shanghai Composite index climbed 0.47 per cent higher before trading up 0.22 per cent by 7.30am GMT. The Hang Seng Index rose to 0.28 per cent after hitting its highest level since July. 

China’s economy has rebounded in recent months, and saw growth of 4.9 per cent between July and September compared to the same quarter last year. 

Officials from the People’s Bank of China also said they were considering policy changes and a more flexible monetary policy but would not make any hasty moves, according to Reuters. 

The People’s Bank of China has taken a more measured approach to policy avoiding the aggressive and broad stimulus seen across Europe and in the US. 

The Federal Reserve has held interest rates at their lowest level between 0 and 0.25 per cent and has repeatedly said it will stay at this level until the economy has recovered. 

This month the Bank of England voted to raise the total amount of quantitative easing from £745bn to £895bn over the course of 2021.

China’s economy has rebounded in recent months, and saw growth of 4.9 per cent between July and September compared to the same quarter last year. 

Global shares retreated overnight after disappointing US retail sales sparked concern among investors that a rise in coronavirus cases could stifle the already-fragile recovery. 

Read more: UK inflation picks up despite lockdowns as clothing prices rise

Federal Reserve chair Jerome Powell said the surge in coronavirus cases is a concern and the economy will need further fiscal and monetary policy support. 

S&P 500 futures fell 0.4 per cent after the index closing down 0.48 per cent. Japan’s Nikkei is trading down 1.1 per cent this morning. 

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