Chinese markets have rallied after Beijing rolled out new stimulus measures to offset the economic losses caused by the coronavirus outbreak.
The Shanghai Composite started the week in the green, gaining 2.28 percent, while the Hong Kong’s Hang Seng Index added 0.58 percent, hitting the highest level in almost four weeks on Monday. Meanwhile, the benchmark CSI 300 Index, which reflects the performance of top 300 stocks traded on the Shanghai and Shenzhen stock exchanges, closed up 2.25 percent.
Monday’s rally reversed the steep plunge two weeks ago, when Chinese stock markets suffered their biggest sell-offs in years. However, the main indices are still far below their highs of last year.
China’s market recovery also drove main European indices up slightly from 0.2 to 0.4 percent, with the pan-European STOXX 600 Index touching a record high of 432.48 on Monday. Automobile stocks were leading the gains as the industry is highly sensitive to the situation in the Chinese economy and the country is a vital part of the supply chain for carmakers around the globe.
As part of Beijing’s efforts to mitigate the impact of the coronavirus outbreak on the Chinese economy, the central bank cut the interest rate of its medium-term lending facility (MLF) loans by 10 basis points. The move paved the way for a reduction in the loan prime rate, which is expected to be announced later this week.
Last week, China’s Ministry of Finance pledged to issue 8 billion yuan ($1.15 billion) in funds for virus prevention and control efforts. As of Friday, finance authorities at all levels had allocated 90.15 billion yuan in support.
Despite the number of new cases slowing, the novel coronavirus infected around 71,000 people globally and the death toll reached almost 1,800 people on Monday.