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China stocks rally on $137b sovereign bond issue plan
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Bull statues are placed in font of screens showing the Hang Seng stock index and stock prices outside Exchange Square in Hong Kong, China, on Aug. 18, 2023. (Reuters/Tyrone Siu)
C
hinese stocks rose in early trade on Wednesday after the country's top parliamentary body approved an additional 1 trillion yuan ($137 billion) sovereign bond issue to support the economy.
The boost in fiscal stimulus demonstrated the top leadership's commitment to boosting economic growth even as the 5 percent full year GDP growth target is almost guaranteed, analysts said.
China's blue-chip CSI 300 Index rose 1.1 percent, while the Shanghai Composite Index climbed 0.9 percent.
Infrastructure stocks shone, advancing more than 3 percent.
In Hong Kong, the Hang Seng Index jumped 2.3 percent and the Hang Seng Tech surged 4.5 percent.
The issuance of extra sovereign debt will widen the country's 2023 budget deficit to around 3.8 percent of gross domestic product from a previously set 3 percent, state media Xinhua said.
"It came to the market as a surprise. China rarely revise its budget," said Zhiwei Zhang, chief economist of Pinpoint Asset Management.
"Part of the funds raised will be utilized next year, hence this helps to boost growth outlook beyond Q4."
The Standing Committee of the National People's Congress also passed a bill to allow local governments to frontload part of their 2024 bond quotas.
Overnight US-listed Chinese stocks rallied 4 percent.
