(Bloomberg) — China’s benchmark stock index rallied the most in two months on Friday, with consumer shares leading gains on expectations of more policy support for the sector.
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The CSI 300 Index closed up 2.4% to its highest level since mid-December. Officials from the finance ministry, commerce ministry, the central bank and other government bodies plan to hold a press conference Monday on measures to boost consumption. A gauge of Chinese stocks listed in Hong Kong ended the day 2.8% higher.
“The press conference on boosting consumption fanned expectations on policy support,” said Shen Meng, a director at Beijing-based investment bank Chanson & Co. “But if it falls short of providing details on increasing income, such optimism may weaken to some extent.”
Friday’s gains in China’s stock market reflect signs of renewed optimism over policy stimulus after the government set an ambitious economic growth target of about 5% for this year at this month’s annual gathering of the National People’s Congress. In an early sign that this year’s tech-driven rally in Chinese stocks may be broadening out, all 10 of the CSI 300’s sector gauges rose on Friday.
Authorities are expected to brief the media on policies such as those on subsidizing a consumer trade-in program and efforts to strengthen the social safety net that include better childcare and elderly-care services, according to Ken Chen, an analyst at KGI Securities.
China’s financial regulator also vowed to develop consumer finance to boost consumption, including encouraging banks to speed up issuing personal-consumption loans, according to a statement. It pledged to increase financing support to service industries such as retail, accommodation, catering, tourism, education and healthcare.
A sub-gauge of consumer staples surged more than 5%, its biggest gain since Nov. 7. Liquor maker Kweichow Moutai Co. and Wuliangye Yibin jumped by more than 5% each. Separately, stocks related to child birth such as Beingmate Co. and Shanghai Aiyingshi Co. surged by the 10% daily limit after local governments rolled out a childcare subsidy.
Sentiment toward the sector has improved following the NPC, where top leaders made boosting consumption a top priority for the first time since President Xi Jinping came to power over a decade ago. While details on the plan remain scarce, some analysts have recommended investors buy consumer stocks.
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