China’s Stock Rally Forecasted to Surge Another 20%: Invesco Cites Optimism for Fiscal Pivot and Government Spending

China's stock market surge could potentially rise another 20 per cent, given the boost in sentiment due to a fiscal shift.

Invesco, a US investment firm, forecasting increased government expenditure, anticipates a 20 per cent profit, in addition to this week's increase.

Invesco, an American financial management firm, anticipates a further increase of 20% in stock values from the present rate, notwithstanding the Hang Seng Index's entrance into a bullish market following a surge of over 20% since its low point in August. This week, the CSI 300 Index experienced a 15.8% leap, the strongest it's been since its formation in November 2008, largely due to the anticipated fiscal stimulus.

"Zhang Zhiwei, the top economist at Pinpoint Asset Management in Hong Kong, views the outcomes of this meeting as a promising move towards tackling the economic hurdles China is dealing with," he stated. "The financial policy in China has followed a procyclical trend this year. However, following this Politburo meeting, it's anticipated to shift to a countercyclical approach, although the extent of this change is still uncertain."

The suggestion of a more expansive fiscal strategy complements the monetary relief plan launched by the central bank earlier this week. This plan included the provision of 800 billion yuan (about US$114 billion) in funding for buying stocks and a commitment to reduce policy and mortgage rates. Investors view a more aggressive fiscal approach as essential to support China's delicate economic recovery, especially since consumer confidence is barely above an all-time low following a sharp drop in home prices and a sharp rise in youth unemployment.