(Bloomberg) -- Chinese stocks that are listed in the US staged a sharp rally Monday as top leaders in Beijing used their most direct language yet on providing monetary easing and boosting domestic consumption.
The Nasdaq Golden Dragon China Index, which tracks the biggest Chinese stocks in the US, climbed 8.5% for its strongest gain since late September. Large-cap technology stocks including Alibaba Group Holding Ltd. and PDD Holdings Inc. rose more than 7% each in New York trading.
Shares of Western companies with high revenue exposure in China also rallied. In the US, consumer names Estée Lauder Cos. and Amer Sports Inc. traded higher. In Europe, miners such as Rio Tinto Plc and luxury brands like LVMH rose.
China’s Politburo vowed to embrace a “moderately loose” strategy for monetary policy in 2025, marking its first major shift in stance since 2011. The top leaders pledged to take a “more proactive” approach on fiscal policies, stabilizing property and stock markets, while promising to “forcefully lift consumption.”
“What was unique about today’s statement was that it really had the positive message regarding household consumption,” Geoffrey Yu, a strategist at Bank of New York Mellon Corp. said in an interview with Bloomberg Television. A relentless drop in Chinese 10-year bond yields may have increased the urge among Beijing’s policymakers to lift expectations, he said.
Monday’s climb in Chinese stocks was reminiscent of a fast rally staged in late September when the central bank unleashed a slew of easing measures. But follow-up steps have disappointed traders, with the government largely refraining from extending direct support to consumers.
The Nasdaq Golden Dragon China Index rallied some 50% between an August low and an October peak, before pulling back about 15% through Friday’s close. A looming trade war with the US since Trump’s November reelection has also hurt sentiment.
Investors will now shift focus to China’s annual closed-door Central Economic Work Conference, which is set to take place later this week. Data out of the world’s second largest economy on Monday pointed to sluggish domestic demand, with consumer prices barely rising in November from a year earlier, missing estimates.
The Politburo’s signals suggest that China’s leaders “are willing to do extraordinary things to offset the external shocks,” Larry Hu, an economist at Macquarie wrote in a note. But it doesn’t mean that another stimulus package will arrive “anytime soon,” he cautioned.
--With assistance from Katrina Compoli.
(Updates ADR and stock moves throughout, and chart.)
