Chinese Stocks Soar 8.5% on 'Economic Stimulus' Hopes... Japan's Nikkei Plunges 4.8%

On the 30th, major Chinese stock indices surged nearly 8.5%, marking the largest increase in 16 years, fueled by the effects of the government's large-scale economic stimulus measures. Meanwhile, Japan, on the verge of a new administration, experienced a sharp decline due to political uncertainty.

On the 30th, the CSI 300 Index, composed of the top 300 stocks by market capitalization on the Shanghai and Shenzhen stock exchanges, closed at 4,017.85, up 8.48% (314.17 points) from the previous trading day. This marked the ninth consecutive day of gains and the largest single-day increase in the past 16 years. The Shanghai Composite Index and the Shenzhen Composite Index also surged by 8.06% and 10.93%, respectively.

This is attributed to the Chinese government's announcement of the largest economic stimulus measures since the COVID-19 pandemic, including interest rate cuts. The People's Bank of China announced the day before that it would uniformly lower existing mortgage rates at commercial banks until the end of next month to revitalize the real estate market. Additionally, the three major Chinese metropolitan areas eased regulations related to home purchases.

Trading volume also exploded. The combined trading value of the Shanghai and Shenzhen stock exchanges reached 2.6 trillion yuan on the day, setting a new record. According to local media, some securities firms experienced order processing delays.

In contrast, the Japanese stock market could not avoid a downturn. The Nikkei 225, Japan's representative stock index, closed at 37,919.55, down 4.8% (1,910.01 points) from the previous trading day. This was the first trading day after Shigeru Ishiba was elected as the new president of the Liberal Democratic Party. The market started off lower and failed to rebound. Ishiba, who is expected to become Japan's next prime minister, has been critical of the Bank of Japan's accommodative policies in the past and supported raising corporate and financial income taxes. The Japanese stock market is expected to show volatility until Ishiba's economic policies become clearer.

At a morning press conference, Yoshimasa Hayashi, Japan's Chief Cabinet Secretary, commented on the sharp stock market decline, saying, "We will closely monitor domestic and international economic and financial market trends with vigilance," and added, "We will work closely with the Bank of Japan to ensure thorough economic and fiscal management."