Chinese stocks in Hong Kong fell after Beijing’s high-profile fiscal stimulus plan failed to meet investor expectations. The Hang Seng China Enterprises Index fell 1.6% at midday, with real estate and consumer-oriented stocks leading the declines. Mainland China’s CSI 300 index fluctuated, recovering from an initial loss of 1.4% before stabilizing.
The disappointment followed the announcement of a 10 trillion yuan ($1.4 trillion) debt restructuring package for local governments. Although the package was designed to alleviate growing debts, it lacked direct measures to boost consumption. Analysts noted that the plan’s focus on debt reduction without significant pro-consumption initiatives fell short of market hopes, particularly as the economy faces deflation and reduced growth forecasts.
The market reactions come amid renewed concerns about economic stability following the election of Donald Trump as president of the United States. UBS downgraded its growth projection for China in 2025 to around 4% and forecast an even slower pace for 2026, citing potential trade tensions and tariff threats.
Continued uncertainty has also pushed foreign investors to withdraw capital from China, with foreign direct investment falling by nearly $13 billion in the first nine months of the year.
Investors’ attention now shifts to the upcoming Central Economic Work Conference in December, where further growth-enhancing measures may be announced. Finance Minister Lan Fo’an hinted at “more vigorous” fiscal policies in the future.