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China stocks surge in biggest single-day rally since 2008 on stimulus cheer

The CSI300 blue-chip index is now up nearly 30% from its February trough

Chinese stocks swept to their biggest single-day gains in 16 years on Monday, with domestic A-shares registering their highest ever turnover, as investors scrambled to join a searing rally sparked by Beijing's latest raft of stimulus measures.

The CSI300 blue-chip index is now up nearly 30% from its February trough, which by some market definitions suggests it is in a bull market, but much of the gains have happened very quickly and over a few sessions since last week.

Many traders, fearing they may miss out of the upsurge ahead of a week-long holiday starting on Tuesday, helped lift the CSI300 index 8.5% at the close, taking its five-day gain to over 25% - the strongest on record.

The broader Shanghai Composite Index meanwhile recorded a total turnover of 1.17 trillion yuan ($166.84 billion) and surged 8.1%.

That took its five-day gains since last Tuesday, when Beijing began rolling out stimulus measures to arrest a slowdown in the broader economy, to 21.4%, the strongest since 1996.

It was also the best single-day percentage gain for both the CSI and SSEC indexes since 2008.

Similarly, the smaller Shenzhen index soared 11% and recorded a turnover of 1.4 trillion yuan.

The blistering rally in Chinese stocks has come on the back of last week's most aggressive stimulus measures announced by Beijing since the pandemic - ranging from outsized rate cuts to fiscal support - in an attempt to shore up its ailing economy.

Particularly in a boost for stocks, the People's Bank of China's (PBOC) also introduced two fresh tools to shore up the capital market, one of which includes a swap programme allowing funds, insurers and brokers easier access to funding in order to buy stocks.

That lit a fire under beaten-down Chinese equities that had been languishing near multi-year lows as recently as early this month, as investors fretted over China's growth prospects.

"It's really a big turnaround, the policies are so intensive, we have never seen such clear instruction to stop housing prices declining and support the stock market," said Dickie Wong, executive director of research at Kingston Securities.

"Many foreign investors are afraid of missing out, local retail investors are asking me what they should add to, institutional investors are rushing to the market to catch up, and the large inflows have pushed the Hang Seng Index up to 21,000."

Hong Kong's Hang Seng Index, which advanced 2.4% on Monday, is now up roughly 24% for the year, dethroning Taiwan to become Asia's best performing stock market.

Adding to the positive momentum was news on Sunday from China's central bank saying that it would tell banks to lower mortgage rates for existing home loans before Oct. 31, as part of sweeping policies to support the country's beleaguered property market.

Guangzhou city also announced the same day the lifting of all restrictions on home purchases, while Shanghai and Shenzhen eased curbs on buying.

That catapulted shares of property companies on Monday, with mainland-listed property stocks advancing 8.2%, while the Hang Seng Mainland Properties Index charged 6.4% higher.

Investor optimism the latest measures could help revive China's anaemic domestic consumption also lifted shares of consumer staples up 8.8%, its biggest daily percentage gain in 16 years.

For the month, the CSI300 index clocked a gain of 21%, its best performance since December 2014. The Shanghai Composite Index similarly ended September with a 17% increase, its most since April 2015.

The Hang Seng Index had its best month since November 2022 with a 17% rise, after delivering its biggest weekly rise since 1998 last week, and fifth largest in the last half-century.

Mainland financial markets will be closed Oct. 1-7 for National Day holidays.

($1 = 7.0128 Chinese yuan renminbi)

(Reporting by Shanghai Newsroom and Summer Zhen in Hong Kong; Writing by Rae Wee; Editing by Vidya Ranganathan and Shri Navaratnam)