China Stimulus Signals Spark a Massive Stock Rally

New hopes of stimulus sparked China’s biggest stock rally in two months — a sharp contrast with US equities tumbling into a correction. The catalyst was the announcement of a Monday news conference by economic policymakers on measures to boost consumption, just what investors have been clamoring for since the property crisis shook the market. One thing Beijing may need to address is a struggle to spend enough money to get the economy moving again.

In another sign of the broader turn in market sentiment, bond investors have started to change their tune and unwind bets that deflation and cheap money in the world’s second-largest economy will be as protracted as in Japan. The momentum may gain further if, as expected, GDP numbers that will be released Monday show stability in the first two months despite US President Donald Trump’s trade war.

And there’s growing conviction that Beijing can emerge as a winner from the escalating disputes on the trade front, which is raising ever-louder alarm about the trajectory of the global economy. “Who is laughing on the side or looking at the side is China,” European Union foreign policy chief Kaja Kallas told Bloomberg Television.

Hong Kong tycoon Li Ka-shing had a much less jubilant day after China criticized his deal to sell most of CK Hutchison’s port business to BlackRock. The company’s shares plunged 6% after the government’s top office for the city’s affairs amplified media commentary that accused the conglomerate of “spineless groveling,” ignoring China’s interests and “selling out all Chinese people” in the sweeping $19 billion deal announced last week.