(Bloomberg) — Chinese stocks fell after a high-profile legislative meeting that disappointed investors hoping for large-scale stimulus to boost the economy and end a deflationary cycle.
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The CSI 300 index was down 0.4% at 9:40 a.m. local time, while a gauge of Chinese stocks listed in Hong Kong fell more than 2%. Both indicators reduced the largest losses observed at the opening. The declines followed a 4.7% drop in the Nasdaq Golden Dragon China Index in the United States on Friday.
Investors had pinned their hopes on the National People’s Congress Standing Committee meeting to provide fresh catalysts for the stock market, especially after Donald Trump’s presidential victory injected new uncertainty over tariffs. Beijing announced a 10 trillion yuan ($1.4 trillion) program on Friday to help local governments address their hidden debt, but stopped short of providing new stimulus to boost consumption.
Chinese data released over the weekend underscored the urgency for more pro-growth efforts as consumer price growth remains near zero and factory-gate prices continue to fall. UBS lowered its growth forecast for China in 2025 after Trump’s election, expecting an expansion of “around 4%” in 2025 and a “considerably slower” pace in 2026.
“With the perceived emphasis on stabilization rather than stimulus, and no measures to facilitate bank recapitalization and/or boost consumption, we think this will be a disappointment for equity investors, even though the headline numbers on the swap debt ratios exceeded expectations,” Nomura Holdings Inc. strategists led by Chetan Seth wrote in a note.
Foreign companies are also pulling their money out of China as growth prospects become bleaker. Foreign direct investment fell by nearly $13 billion in the first nine months of the year, a sign that some investors remain pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth.
The CSI 300 index, a benchmark for domestic stocks, fell 1% on Friday as traders grew nervous ahead of the NPC announcement. The indicator rose almost 35% from its September low through October 8, but has largely moved sideways since then.
–With the help of Winnie Hsu.
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