China policy shift boosts stocks with exposure to the country

On Monday, US stocks with significant ties to China, spanning from materials and consumer sectors to Chinese ADRs, experienced a notable rally. This surge came in response to announcements by China’s top leaders, signaling a shift towards more accommodating monetary and fiscal policies. The KraneShares CSI China Internet ETF saw an 11% increase, with major internet companies such as Alibaba (NYSE:), Baidu (NASDAQ:), PDD, JD (NASDAQ:).com, NetEase (NASDAQ:), Trip.com, KE Holdings, and Bilibili (NASDAQ:) all making substantial gains in New York.

The Hang Seng Tech Index, after initially shedding some value, rebounded to close 4.5% higher, while the broader rose by 2.8%. The pivot in China’s economic strategy, the first of its kind in approximately 14 years, involves embracing a “moderately loose” monetary policy. Additionally, the politburo has committed to stabilizing the property and stock markets and to stimulating domestic demand.

This policy change follows recent data indicating a slower-than-expected rise in China’s consumer price index, which only increased by 0.2% year-over-year in November. Market participants are now keenly anticipating the outcomes of China’s Central Economic Work Conference, scheduled to occur later this week, which could reveal further economic directives.

Consumer brands with a footprint in China also benefited from the optimistic outlook, with Estee Lauder (NYSE:), Nike (NYSE:), Las Vegas Sands (NYSE:), Melco, Wynn Resorts (NASDAQ:), Canada Goose, Yum China, and Starbucks (NASDAQ:) all posting gains. companies responded positively to the news on Monday morning, with Freeport-McMoRan (NYSE:) climbing 5.6%, Southern Copper (NYSE:) up 7%, Taseko Mines (NYSE:) advancing 8.7%, ERO increasing 7.9%, and Teck Resources (NYSE:) growing by 5.9%.

Chemical stocks joined the rally, with Celanese (NYSE:) leading the charge, up 6.5%, followed by Albemarle (NYSE:) with a 6.2% gain, FMC (NYSE:) rising 5.1%, and Mosaic improving by 4.5%. These movements underscore the broad market reaction to China’s economic policy announcements and their potential impact on companies with business interests in the region.

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