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before the market opened today, "one bank, one association, and one bureau" made important statements and launched a "combination punch" of policies, including lowering the reserve requirement ratio, lowering interest rates, and lowering the interest rates on existing mortgage loans. they also stated that they would create new policy tools to support the development of the stock market, with the initial funding scale being 500 billion yuan.

boosted by the news, the a-share and hong kong stock markets performed strongly. the shanghai composite index rose by more than 2% to regain 2,800 points, and the chinext index rose by more than 3%; the hong kong hang seng index rose by nearly 600 points, and the hang seng tech index soared by 4.19%.

as of press time, the ftse china a50 index futures rose by 4%.

christopher wong, a strategist at ocbc bank in singapore, pointed out that the interest rate cut and reserve requirement ratio cut were more or less expected, but what was slightly different this time was the tools to support the stock market. "this is a clear sign that policymakers are working to restore confidence, and the stock market should cheer this."

shanghai composite index regains 2,800 points

a-shares surged today, with the shanghai composite index returning to 2,000 points; as of close, the shanghai composite index rose 2.38%, the shenzhen component index rose 2.58%, and the chinext index rose 3.45%.

on the market, securities, insurance, and diversified financial sectors all strengthened, with xinli financial hitting the daily limit, followed by jinlong holdings, tianfeng securities, china galaxy securities, etc.; the real estate sector was active, with china communications construction real estate, gemdale group, cinda real estate, nan guo real estate, china merchants shekou, etc. all rising; m&a and restructuring concept stocks continued to be active, with yicheng new energy hitting the daily limit of 20cm, and yatai group, shuangcheng pharmaceutical, etc. rising by more than 10%.

but it is worth noting that after the a-share market opened sharply higher, there was a period of intraday volatility. as the interest rate cut and reserve requirement ratio cut were both expected, the market digested the news and the index rose and fell. the shenzhen component index was the first to turn green, having previously risen by nearly 1.5%.

after the news that pan gongsheng, governor of the people's bank of china, said that a stabilization fund was under study, a-shares rose strongly again, with the shanghai composite index reaching 2,800 points.

hang seng technology surged 4.19%, and tech stocks surged across the board

the hong kong stock market performed even better, boosted by the fed's interest rate cut. as of midday, the hang seng index rose 3.28% to 18,845.37 points, and the hang seng technology index rose 4.19%.

on the market, large technology stocks, large financial stocks, and stocks with chinese characters in their names all rose across the board. jd.com surged by more than 7%, and industry leaders such as citic securities, china pacific insurance, and china merchants bank led the gains.

citic securities: hong kong stocks are expected to usher in a monthly recovery. since early august, the valuation, trading and capital flow indicators of hong kong stocks have shown that the historical market bottom characteristics since 2022 have reappeared. on the one hand, although the hong kong stock mid-year report shows that the revenue side is still under pressure, the promotion of cost reduction and efficiency improvement by enterprises still helped hong kong stocks to increase their net profit by 0.8% year-on-year in the first half of 2024, while the net profit margin and roe in the same period also rose by 0.3 and 0.7 percentage points month-on-month to 11.7% and 4.7%, respectively.

in particular, internet companies led by alibaba have repurchased large quantities of shares this year, and we expect that the return on shareholder cash will be significantly boosted; at the same time, the net profit growth rate expectations for the hang seng index and hang seng technology in 2024 (bloomberg consensus expectations) have continued to be revised upward after the mid-year reporting period began in august, and are currently 7.1% and 17.7%, respectively.

on the other hand, the hong kong monetary authority may also reverse the trend of hong kong local funds flowing out of hong kong stocks by following the fed's interest rate cut; from the valuation dimension, the pe of major indices (except the state-owned enterprise index) is still at a historical low of nearly two standard deviations below the historical mean. under the catalysis of the start of the us dollar interest rate cut cycle, combined with the analysis of fundamentals, valuation and liquidity, we believe that the current price-performance ratio of hong kong stocks is still significant, and the rebound since mid-september is expected to continue to become a monthly level repair market, among which the growth style will continue to outperform. it is recommended to pay attention to the hong kong stock internet, biotechnology, education and training and consumer electronics industries.

policy "combination punch": interest rate cuts, reserve requirement ratio cuts, and existing mortgage interest rates cuts

the state council information office held a press conference on september 24, introducing the relevant situation of financial support for high-quality economic development and releasing a major policy package.

pan gongsheng, governor of the people's bank of china, said at a press conference held by the state council information office thatthe deposit reserve ratio was adjusted by 0.5 percentage points to provide approximately 1 trillion yuan of long-term liquidity to the financial market.in terms of mortgage loans, the interest rates of existing mortgage loans will be lowered and the minimum down payment ratio for mortgage loans will be unified.the interest rate on existing mortgages will be lowered to around the level of new mortgage rates, with an average drop of about 0.5 percentage points expected.the national minimum down payment ratio for second home mortgages will be reduced from 25% to 15%, and the minimum down payment ratio for first and second home mortgages will be unified.

pan gongsheng also revealed at the press conference that the people's bank of china will create structural monetary policy tools for the first time to support the capital market. one of them is the securities, funds, and insurance companies swap facility, which supports qualified securities, funds, and insurance companies to use their own bonds, stock etfs, and csi 300 constituent stocks as collateral to exchange for high-liquidity assets such as treasury bonds and central bank bills from the central bank. this policy will greatly increase the funds obtained by relevant institutions and increase stock holdings. the funds obtained by institutions through this tool can only be used to invest in the stock market.

pan gongsheng pointed out that the scale of the first phase of the swap facility operation is 500 billion yuan, and the scale can be expanded in the future depending on the situation. "i told chairman wu qing (of the china securities regulatory commission) that as long as this matter is done well, we can increase it by another 500 billion yuan, or a third 500 billion yuan in the future. we are open to it."

when talking about the establishment of a stabilization fund, pan gongsheng, governor of the people's bank of china, said in response to a question from securities times that it was under study.

wu qing, chairman of the china securities regulatory commission, said at the meeting that the total amount of long-term funds in the capital market is insufficient, the leading role is not sufficient, and the long-term money and long-term investment system has not been fully formed.the china securities regulatory commission and other departments have formulated guiding opinions on promoting the entry of medium- and long-term funds into the market and deployed a series of arrangements to support the entry of medium- and long-term funds into the market., focusing on making more long-term money, making long-term money longer and providing better returns, and promoting the entry of medium- and long-term funds into the market.

li yunze, director of the state financial supervision and administration bureau, said at the meeting that large commercial banks are the main force of my country's financial system in serving the real economy. the main regulatory indicators of large commercial banks are in a healthy range. in recent years, they have mainly relied on their own profit retention to increase capital. however, as banks continue to increase their profit concessions, the profit growth rate has slowed down.the core tier-one capital of six large commercial banks will be increased.in accordance with the coordinated promotion and orderly implementation in phases and batches, we will continue to urge large commercial banks to improve their refined management level and strengthen their ability to develop high-quality under capital constraints.