Stimulus rally: China stock market has best day since 2008
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Something remarkable is underway in the world's second-largest economy: China's government has embarked on an all-out effort to reverse faltering economic growth and financial markets are cheering the move.
Why it matters: Signs of economic deterioration in China have been building over the past year. The slew of policies unveiled in recent days show how far officials are willing to go to maintain China's strength in the global economy.
What they're saying: "We believe the persistent growth weakness has hit policymakers' pain threshold, and the policy put has been triggered," Lisheng Wang, a China economist at Goldman Sachs, wrote in a recent note.
By the numbers: China's main stock market index rose nearly 9% overnight Sunday — the largest single-day gain in more than 15 years.
- Over the weekend, two of China's largest cities removed all homebuying restrictions. Last week, its central bank cut interest rates and announced new funds to support the stock market. It also cut the amount needed for mortgage down payments.
- Meanwhile, local governments are expected to make one-time payments to its poorest citizens.
The bottom line: The stimulus is meant to address a troubling mix of downbeat demand from its consumers, deflationary conditions and the burst bubble in its property sector.
- It's unclear whether it will be enough, even if investors are optimistic.
