Investors are waiting for a crucial legislative gathering in Beijing next week, which is widely expected to endorse fiscal support to rejuvenate the economy and stoke a rally that has recently added US$4 trillion to markets in China and Hong Kong.

The standing committee of the National People’s Congress (NPC) will convene from November 4 to 8, with legislators reviewing a raft of issues, including state asset management and law amendments, according to Xinhua.

Investors have high expectations from the NPC meeting, particularly after stock benchmarks in China and Hong Kong have jumped more than 20 per cent since late September, making them the best performers globally in the period. The momentum has weakened recently, as investors have adopted a wait-and-see attitude.

For the bull run to sustain, the NPC will need to approve fiscal stimulus worth at least 2 trillion yuan (US$280 billion) to complement the monetary easing unveiled in September, according to several top brokerages.

“If the scope of the fiscal policies exceeds expectations, China’s stocks will probably break out of the sideways trading pattern and restart an uptrend,” said Huang Hongwei, an analyst at Chasing Securities.

Chinese stocks have surged more than 20 per cent in the last one month.

The NPC meeting comes at a time when the appetite for Chinese stocks has returned among global fund managers who fled the market amid disappointment over Beijing’s piecemeal measures.

A Goldman Sachs’ China stock strategist said his team held 35 meetings with investors over five days on a recent business trip to the US.

Legislators are likely to approve quotas for government bond issuances that will be used to fund a swap programme for local-government debt and replenish tier-one capital at key state-owned banks, according to BNP Paribas.

The finance ministry disclosed the swap scheme and banks recapitalisation plan earlier this month.

The market will react positively if the legislative body approves an increase in the budget deficit for this year and allows sales of additional sovereign bonds to finance government spending, the French bank said in a report this week.

“There is still a lack of agreement on whether the budget deficit will be raised for this year and whether extra bonds will be issued accordingly, and there is no clear consensus on the size of fiscal stimulus,” said Lu Ting, chief China economist at Nomura Holdings. “Markets are also wondering to what extent the US election results will impact Beijing’s stimulus package.”

The Japanese investment bank predicted that the NPC would approve sales of 1 trillion yuan of government bonds for banks’ recapitalisation, while another 10 trillion yuan would be set aside to tackle the local-government debt crisis.

Goldman Sachs estimated the legislators will approve as much as 2 trillion yuan of bond issuances to recapitalise banks and an additional 6 trillion yuan to resolve local government debt.

Both investment banks said that more aggressive and expansionary fiscal policies would be adopted next year should former US president Donald Trump win the election, or if higher tariffs are imposed on Chinese exports.

Benchmarks in China and Hong Kong have been trading in tight ranges over the past few weeks, underscoring the wait-and-see approach among traders.

“In the medium term, whether the market can achieve a sustainable uptrend depends on the magnitude of fiscal and relevant policies, and the pace of corporate earnings recovery,” said Meng Lei, a strategist at UBS Group in Shanghai.