China-based U.S.-listed stocks experienced a notable pre-market rally on Friday, driven by China’s better-than-expected GDP figures for the third quarter. Several major Chinese companies saw significant gains, with Alibaba Group Holding Ltd (BABA) rising by 3.23%, PDD Holdings Inc. (PDD) increasing by 5.38%, Baidu Inc (BIDU) climbing 4.23%, and JD.Com Inc (JD) surging 5.05%. In the electric vehicle sector, Nio Inc (NIO) and Li Auto Inc (LI) saw increases of 5.44% and 6.48%, respectively.
China’s GDP grew by 4.6% year-over-year in the third quarter, exceeding expectations from a Reuters poll, though slightly below the 4.7% growth in the previous quarter. This marks the slowest growth rate since mid-last year, moving further from Beijing’s 5% annual target, according to CNBC. Retail sales in September grew by 3.2% year-on-year, surpassing forecasts, and industrial output rose by 5.4%, also exceeding expectations. However, house prices fell by 5.8% year-over-year in September, a larger decline than the 5.3% drop in August.
The positive economic data comes amid China’s efforts to stave off a potential economic downturn. In late September, China announced a series of stimulus measures, including a 50 basis-point cut to the mandatory reserve ratio and a reduction in the benchmark policy rate by 0.2 percentage points. The People’s Bank of China also reduced rates on existing mortgages and lowered the minimum down payment on second homes. Despite these efforts, investor sentiment remained cautious, as the absence of a large-scale economic package left traders underwhelmed. The CSI 300 index in Mainland China surged 3.62% to close at 3,925.23, after hitting an intraday high of 5.5%.
While the strong GDP figures offer a glimmer of hope for China’s economy, the market’s cautious response highlights the uncertainties surrounding the country’s economic outlook. The effectiveness of the recent stimulus measures in boosting economic growth and confidence remains to be seen. Investors will be closely watching for further policy announcements and economic data to gauge the direction of the Chinese economy.