Zinger Key Points
- China-based stocks are surging Tuesday following several announcements from China's securities regulator.
- "The signals from authorities are very clear, they want to prevent the markets from falling further," one economist says.
NIO Inc NIO shares are racing higher Tuesday alongside several U.S.-listed Chinese stocks amid reports of potential China stimulus measures.
What To Know: China-based stocks are leading the market higher Tuesday following several announcements from China’s securities regulator.
Chinese authorities have ramped up efforts to stop its slumping market from falling further after China's CSI 300 hit five-year lows last week.
According to Reuters, China’s securities regulator announced on Tuesday that it would suspend brokerages from borrowing shares for lending and cap re-lending business sizes in an effort to curb short selling. Following the announcement, several mutual fund companies said they would stop lending shares and phase out securities re-lending.
The report indicates that State fund Central Huijin Investment pledged to expand its investments in exchange-trade funds. The securities regulator also reportedly pushed companies to help boost shareholder value via buybacks, dividends, M&A and other avenues.
China-based stocks also appear to be moving higher in anticipation of an upcoming meeting between President Xi Jinping and financial regulators, which shows how urgently Chinese authorities are trying to put a stop to continued heavy losses in Chinese markets, per Reuters.
“The signals from authorities are very clear, they want to prevent the markets from falling further,” Ryota Abe, an economist at SMBC, reportedly said.
“These kind of measures were needed to support investors' sentiment, so the initial reactions were all positive. However, … as long as markets have fundamental concerns on the real economy, the slew of announcements will remain effective only in the short term.”
Read Next: China Stocks Surge After Beijing Announces New Measures, Xi Jinping Steps In
NIO Price Action: Nio shares are down about 35% since the start of the year. The stock was up 7.99% at $5.81 at the time of publication, according to Benzinga Pro.
Photo: courtesy of Nio.
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