China ADRs, miners and casino stocks surge as Beijing rolls out new stimulus measures

Authors: Lisa Pauline Mattackal and Nikhil Sharma

(Reuters) – Shares of U.S.-listed Chinese companies rose on Tuesday, along with shares of China-focused exchange-traded funds, casino companies and commodity-linked stocks, as Beijing’s biggest stimulus measures since the pandemic raised hopes of renewed growth.

The People’s Bank of China has unveiled a series of policy measures, including interest rate cuts, a reduction in mortgage rates and new tools to boost capital market financing, aimed at reviving demand in the world’s second-largest economy.

E-commerce companies Alibaba Group, JD.com and PDD Holdings were among the biggest gainers on Wall Street, with shares rising between 5.4% and 8%.

Chinese carmakers Nio and Li Auto gained about 7% each, while shares of Tencent Music Entertainment Group rose 14%.

Mining stocks also rose as metals prices rose on hopes of rising demand. The S&P 500 materials sector rose 1% to a record high, with miner Freeport-McMoran rising more than 6% to beat the S&P 500.

Shares of casino operators Wynn Resorts and Las Vegas Sands, which have a significant presence in Macau, rose 4% and 5.6% respectively, while Estee Lauder rose 5.6%, tracking global luxury stocks on hopes of renewed consumer demand in the key Chinese market.

Exchange-traded funds tracking Chinese markets also gained, with the iShares MSCI China ETF rising 6.4% after the blue-chip CSI300 index posted its best day in four years. The KraneShares CSI China Internet ETF rose almost 7% to a more than two-month high.

Investors have been wary of Chinese assets this year amid weakening growth, weak consumer demand, a severe housing market slump and the prospect of renewed trade tensions with the United States.

The CSI 300 Index fell more than 2% year-on-year, while global stock markets rose 15.8%.

“If people are looking for a bargain, they can invest in Chinese stocks because they have been battered so badly that it could be a good short-term opportunity,” said Jay Woods, chief global strategist at Freedom Capital Markets.

The MCHI ETF has seen net outflows of more than $2 billion over the past year, according to VettaFi data, and now has about $4.3 billion in assets under management.

MORE STIMULATION AHEAD?

Global brokerages including Goldman Sachs and Citigroup earlier this month lowered their forecasts for China’s economic growth in 2024, with Citigroup pointing to the need for more fiscal stimulus.

Despite the latest measures, it remains unclear whether the stimulus will be enough to boost growth. Many analysts expect policymakers to step up again.

“It feels like it’s much closer to the beginning of stimulus than the end of stimulus,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

(Reporting by Lisa Pauline Mattackal in Bengaluru; Editing by Anil D’Silva)