China stocks hold steady after State Council policy support pledge

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China stocks steady after support

Highlights

Mainland Chinese stocks edge higher as the State Council pledges increased counter-cyclical policy support and new property market stabilization measures.
The Shanghai Composite Index rises 0.1%, onshore developer Vanke gains nearly 8%, and the 5G Communication Index increases 0.8% by lunch break.
Hong Kong's Hang Seng Index drops 0.6%, Hang Seng Innovative Drug Index climbs 3.3%, and Shein Global Holdings hits its lowest level since September 1 debut.

Policy signals support mainland shares

As reported by Reuters, mainland Chinese stocks are edging higher on Tuesday after the State Council pledges to step up counter-cyclical policy support to address rising economic strains and roll out measures to stabilise the property market.

By the lunch break, the blue-chip CSI300 Index is roughly flat, while the Shanghai Composite Index is up 0.1%. Onshore property developers are leading advances, with Vanke rising nearly 8%.

Goldman Sachs analysts say policymakers are expected to broaden the use of housing provident funds to slightly reduce weighted-average mortgage rates, while more large cities may introduce local housing easing measures. Sentiment among AI component makers is also improving modestly, with the 5G Communication Index up 0.8% and the tech-focused STAR50 Index rising 0.6%.

Holiday trading and external pressures weigh on sentiment

Market participation remains thin ahead of China's week-long National Day holiday, which starts on Thursday, with onshore trading set to resume on October 8.

Northeast Securities analysts say rising U.S. Treasury yields and insufficient liquidity before the holiday are weighing on sentiment. They add that after sharp declines, negative sentiment is fading quickly and quality assets are becoming more attractively valued again.

In Hong Kong, the benchmark Hang Seng Index is down 0.6%. The Hang Seng Innovative Drug Index rises 3.3%, but tech majors listed in the city fall 1.4%, while shares of fast-fashion platform Shein Global Holdings drop to their lowest level since the company's September 1 debut.

In our earlier article on Chinese workers’ backlash against National Day “compensation work”, we covered how mandatory weekend make-up shifts around the October holiday sparked a surge of online criticism and highlighted broader concerns over overtime and weak labour protections. We also noted rising labour disputes and growing consumer-led pressure on employers, factors that could weigh on household sentiment and spending during the holiday period.

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