HK and mainland stocks post modest gains

Hong Kong and mainland Chinese markets saw slight increases as the week of National Day approached on Wednesday. The Hang Seng Index in Hong Kong gained 0.37 percent, reaching 24,613 points, while the Hang Seng China Enterprises and Hang Seng Tech indices rose 0.50 percent and 0.10 percent respectively. In Shanghai, the Shanghai Composite index climbed 0.3 percent, and the CSI 300 Index also saw a 0.3 percent increase.

Despite these modest gains, Chinese blue chips remained near one-year lows following the release of a series of credit and mortgage support measures by Beijing on Tuesday. The measures, the broadest and most powerful in two years, were not as aggressive as the September 2024 policies, which included rate cuts and stock market support, according to Duncan Wrigley, chief China economist at Pantheon Macroeconomics.

Wrigley noted that the new policies would not resolve China's structural imbalances, such as sluggish domestic demand and heavy reliance on exports. The People's Bank of China reduced its one-year pledged supplementary lending (PSL) rate by 25 basis points to 1.5 percent to support infrastructure investment, raise re-lending quotas for tech firms and small businesses, and provide mortgage subsidies for first-time buyers.

However, Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management, stated that while the policies were headed in the right direction, they were insufficient and lacked strong stimulus. Market sentiment remained cautious with liquidity thinning significantly ahead of the National Day holiday, with combined turnover on China's Shanghai and Shenzhen exchanges dropping to its lowest level since July 2025.