On Wednesday (25th), the Chinese stock market welcomed a comprehensive rally, with both A and H shares opening significantly higher. All three major indices in the Hong Kong stock market rose by more than 3%. The Hang Seng Tech Index led the gains, while the Hang Seng Index extended its winning streak to 11 consecutive days, reaching its highest level since May 21. In the A-share market, the ChiNext Index surged by 2%, and the Shanghai Composite Index broke through 2900 points, setting a new high for over a month.
Behind this market surge is the Chinese central bank's significant monetary easing policy. On September 25, the central bank conducted a 300 billion yuan one-year Medium-Term Lending Facility (MLF) operation, lowering the winning bid rate from 2.3% to 2.0%. This move not only effectively reduced the funding costs for banks but also led to a decrease in market interest rates through the rate transmission mechanism. It is expected that the Loan Prime Rate (LPR) and deposit rates will also follow suit. Analysts believe that lower interest rates will help boost market confidence and promote steady economic growth.
In addition to the rate cut, the central bank has recently launched a series of policies aimed at the stock and real estate markets. These include reserve requirement ratio (RRR) cuts, lowering interest rates on existing mortgages, introducing innovative monetary tools to support the stock market, and five measures to support the real estate sector. This series of policy combinations has quickly elicited positive responses from international markets. Winnie Wu, a China strategist at Bank of America, described these measures as an "explosion of investor confidence," and Wall Street generally holds an optimistic view of Chinese assets' prospects.
Overall, the central bank's strong policies are gradually showing their effects, and the continuous rise of A-shares and Hong Kong stocks reflects the market's optimistic expectations for future economic recovery. Market participants generally believe that with the continued advancement of monetary easing policies, the Chinese stock market is likely to gain further upward momentum.
