Chinese stocks have seen their sharpest decline in nearly three decades, following a lack of new economic measures from Beijing to stimulate the world’s second-largest economy. Investor hopes were dashed after China’s top economic planning authority failed to deliver on expectations for further steps to boost growth.
Stock markets across Asia tumbled after the National Development and Reform Commission (NDRC) held a press conference on Tuesday. Investors were anticipating detailed policies to build on the stimulus measures announced in September. Instead, NDRC officials mainly reviewed previous announcements and provided general commentary on China’s economic situation, leaving markets disappointed.
The absence of fresh policy actions triggered a major market sell-off. On Wednesday, the Shenzhen composite index dropped by 8.2%, marking its biggest fall since May 1997. The Shanghai stock exchange also plummeted by 6.6%, and the CSI 300 index, which tracks the largest listed companies in Shanghai and Shenzhen, slid by 7.1%. Hong Kong’s Hang Seng index was down by 1.4%.
Despite this plunge, stock markets are still higher compared to last month, before China’s central bank and politburo unveiled a “package of incremental policies” aimed at stabilising the economy. Over the past year, the CSI 300 index has gained 7%, reflecting some resilience despite recent setbacks.
In response to the stock market drop, China’s State Council Information Office announced a press conference for Saturday, featuring finance minister Lan Fo’an. The focus will be on “intensifying countercyclical fiscal policy adjustments to promote high-quality economic development,” suggesting that additional measures may be on the horizon.
However, some fiscal policies, such as the issuance of government bonds, will need approval from the National People’s Congress, China’s legislative body. The standing committee of the Congress is set to meet in late October, and analysts will be closely monitoring the session for signs of further economic stimulus.
As China’s economic slowdown continues to weigh on global markets, investors remain hopeful for more decisive action to revive growth.