$HOLO
Chinese stock bulls have been burnt many times before but the current wave of euphoria is so strong that they're throwing caution to the wind.
The CSI 300 Index has just capped its best week since November 2008, thanks to a barrage of monetary stimulus and vows from the Politburo to boost fiscal spending.
Goldman Sachs Group Inc. says "this time is different," lending support to an emerging view that the rally may prove more sustainable. Morgan Stanley sees another 10% upside.
Yet how long this confidence will last hinges a lot on the scale and speed of follow-up policy action. Any weakness in spending during the Golden Week holiday may also shift focus back to China's consumer malaise and an entrenched property crisis that has pushed the country to the cusp of a deflationary spiral.
"The recent announcements from the Politburo echo the sentiment of Mario Draghi's 'whatever it takes' speech a decade ago, underscoring a strong resolve to support the economy," said Manish Bhargava, chief executive officer at Straits Investment Management in Singapore, referring to the former European Central Bank president's pledge to preserve the common currency during the 2012 debt crisis. "This China rally is very strong."
Measures released this week include interest rate cuts, freeing-up of cash for banks, billions of dollars of liquidity support for the stock market, and a vow to end the decline in property prices.
Reported By BNNBloomberg