Finance

China stocks just had their best day in 16 years, sending related U.S. ETFs soaring

Published

8 months ago

September 30, 2024

Business Finance News

A shareholder at a securities hall in Hangzhou, the capital of Zhejiang province in east China, on Sept. 24, 2024.

Cfoto | Future Publishing | Getty Images

China stocks rallied to their best day in 16 years, with related U.S. ETFs also soaring after recent economic stimulus buoyed investor optimism in the market.

The Shanghai Composite rallied 8.06% in its best day since September 2008, and capping a nine-day win streak for the index. It ended September up 17.39%, its first monthly gain in five and its best monthly performance going back to April 2015.

The Shenzhen Composite Index closed up 10.9%, its best day since April 1996. It gained 24.8% in September, its best month going back to April 2007.

The China ADR index gained nearly 6%.

The U.S. listed shares of human resources company Kanzhun surged 9% along with online video company Bilibili. Tencent Music Entertainment gained 2.9%, while online brokerage company Futu Holdings rose 15%.

China ADR Index

The KraneShares CSI China Internet ETF (KWEB) gained 4.2%, while the iShares China Large-Cap ETF (FXI) rose 2.2%.

The U.S. listed shares of Alibaba had gained more than 4%, while JD.com was up by 5.4%.

Chinese stocks have been on a tear after Beijing last week unveiled a slew of economic stimulus measures including interest rate cuts to support the weak property market. On Thursday, state media said Chinese President Xi Jinping and other top leaders affirmed the measures.

“While we don’t know for sure if there’s going to be enough to really kick the economy back into gear, it’s certainly the right first step,” said Art Hogan, chief market strategist at B. Riley Securities. “I think the impact of a strengthening China can’t be underestimated.”

“On balance, this is going to be an ambiguous positive for markets going forward,” he added. “And I think that there’s a lot of investors are going to have to quickly recalibrate their expectations.”

More U.S. investors are bullish on the market following the move. Last week, billionaire hedge fund founder David Tepper said he is overwhelmingly bullish on Chinese equities, having bought “everything” related to China following the Federal Reserve’s recent rate cut.

— CNBC’s Gina Francolla, Nick Wells, Lim Hui Jie and Evelyn Cheng contributed to this report.

Finance

China’s EV race to the bottom leaves a few possible winners

Published

4 hours ago

June 8, 2025

Business Finance News

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

2 days ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”