Asian markets started November on a firmer footing, led by gains in Chinese equities as Beijing signalled further measures to support its stock market. The prospect of additional state-backed purchases and expanded lending helped offset disappointing manufacturing data and renewed concerns about the Chinese economy.
The CSI 300 rose as much as 1.3%, while the Shanghai Composite gained 1.2% and Hong Kong’s Hang Seng advanced 0.6%. Hong Kong’s technology index performed particularly well, rising 3%. The gains followed a difficult October, when the CSI 300 lost 8.5%, its worst monthly performance in more than a decade.
China’s authorities are preparing further support for the market. The central bank, securities regulator and financial regulator are expected to discuss measures with major banks and securities firms, focusing on lending facilities that finance share buybacks and purchases by major shareholders.
A major state-owned bank is also considering increasing lending quotas by as much as 200 billion yuan for two state asset management companies linked to the government’s National Team. This would provide additional funding for state-backed institutions to purchase shares and help stabilise the market.
The central bank has separately announced another operation under its Securities, Funds and Insurance Companies Swap Facility, potentially providing more than 100 billion yuan in liquidity to eligible financial institutions. Together, these measures demonstrate Beijing’s intention to use financial institutions and state-linked capital to support equity valuations.
The policy response comes as China’s economy shows signs of weakening. The official manufacturing purchasing managers’ index fell to 49.3 in October from 50.1 in September, moving back into contraction territory. The non-manufacturing PMI also declined to 49.7 from 50.2, indicating weaker activity across services and construction.
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