More upside likely for Chinese equities

CHINESE equities are once again in the spotlight with strong gains since August 2024. Driven by policy interventions, the MSCI China index has risen more than 27 per cent year to date. This is the first time Chinese equities outperformed global equities after three years of negative returns.

The People’s Bank of China (PBOC) and other regulatory bodies introduced significant monetary easing measures, including a 20 basis points (bps) policy rate cut, a 50 bps cut in the Required Reserve Ratio and an 800 billion yuan (S$148.4 billion) investment aimed at bolstering the domestic equity market.

PBOC also introduced a 500 billion yuan swap facility and a 300 billion yuan re-lending facility to encourage stock repurchases, a maiden direct intervention in the equity market which significantly boosted market liquidity.