By Brian Swint

Shares of China companies rose sharply Tuesday after its central bank lowered interest rates and the government added stimulus designed to bolster the stock market.

The moves show that authorities are starting to step up efforts to revive the second-biggest economy, which never really got going again after the Covid-19 pandemic. It has been dragged down by an enormous property slump that has kept consumer spending subdued and put the country on the brink of deflation. The government's goal of reaching 5% growth this year is looking increasingly difficult to hit.

The Hang Seng Index in Hong Kong was up 4% in the afternoon. The Shanghai Composite index added 4.2%. Retailers Alibaba and JD.com gained 6% and 10% respectively. Electric vehicle maker BYD added 3.1%, and NIO, another Tesla rival, jumped 10%.

The People's Bank of China said it would lower the benchmark seven-day interest rate as well as reduce the amount that banks hold in reserves. Governor Pan Gongsheng said that more easing is on the way. The central bank also offered about $70 billion to investors to buy stocks, and more funds for companies to buy back shares.

The central bank "has delved into its bag of tricks to try to get growth back to the 5% target," Matt Britzman, an analyst at Hargreaves Lansdown. "This isn't the central bank going all-in on stimulus, there's plenty more left in the tank, but It's a clear sign that it's not going to sit back and watch growth disappoint."

Write to Brian Swint at brian.swint@barrons.com

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September 24, 2024 05:06 ET (09:06 GMT)

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