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BackChinese tech stocks slump despite rate cut, bonds gain as US yields rise
Chinese tech stocks slump despite rate cut, bonds gain as US yields rise
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SCMP Tech1 hour agoBusiness1 min readChina

Chinese tech stocks slump despite rate cut, bonds gain as US yields rise

csi 300star market 50pledged supplementary lending rate

Quick Look

  • Mainland Chinese equities fell to a 13-month low as technology stocks sold off, even after the central bank cut its key lending rate to stimulate the economy.
  • Chinese government bonds gained appeal amid rising US Treasury yields, while analysts warned of a bumpy fourth quarter for stocks due to weak stimulus and shifting AI sentiment.

AI-generated summary

Why It Matters

Chinese equities have faced pressure from technology sector weakness and concerns over the adequacy of stimulus measures. The Star Market 50's significant Q3 decline highlights ongoing volatility in tech-related investments.

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A sell-off in technology stocks pushed mainland Chinese equities to their lowest level in more than a year, even as Beijing stepped up support for the economy with a key interest rate cut. At the same time, Chinese government bonds attracted fresh interest as US Treasury yields climbed to a new high.

Here are some figures that have captured market attention this week.

China’s CSI 300 Index hits 13-month low

Mainland China’s CSI 300 Index dropped 2.2 per cent on Monday to its lowest level since August 21 last year, while the technology-focused Star Market 50 index tumbled 4.1 per cent. A 31 per cent plunge in the Star Market 50 during the third quarter contributed to a 12 per cent decline in the CSI 300.

Mainland Chinese and Hong Kong stocks could face a bumpy road in the fourth quarter amid underwhelming stimulus measures, concerns over further interest rate increases and changing sentiment towards artificial intelligence-related investments, analysts said.

Key lending rate cut by 0.25 percentage points

China’s central bank cut the one-year pledged supplementary lending rate to 1.5 per cent from 1.75 per cent on Tuesday, aiming to encourage policy banks to provide funding for projects aligned with national priorities.

The move came alongside a mortgage interest subsidy programme for first-time homebuyers, offering an annualised interest subsidy of 1 percentage point for up to five years for loans with principals of up to 1 million yuan (US$149,000).

What to Watch

AI outlook — possibilities, not facts

  • Chinese government bonds will continue to attract interest if US Treasury yields remain elevated

    Likely · Within weeks

  • Mainland Chinese and Hong Kong stocks may experience volatility in Q4 due to underwhelming stimulus and changing AI investment sentiment

    Possible · Within months

Open Questions

  • Will the rate cut and mortgage subsidy effectively stimulate lending and property demand?
  • How will shifting sentiment toward AI-related investments affect tech stock performance in Q4?
  • Can Chinese government bonds sustain inflows if US yields continue to rise?

Related Topics

csi 300
OrganizationsPeople's Bank of China
PlacesMainland ChinaHong KongUnited States
Topicsstar market 50pledged supplementary lending ratemortgage interest subsidyus treasury yieldschinese government bonds
This article was originally published by SCMP Tech.

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