China will introduce economic stimulus policies

Investment in Australian materials stocks is heating up due to the Chinese government's commitment to increase borrowing to stimulate the slowing economy. According to News Corp Australia, this is a classic case of "buy on rumors, sell on facts."

On the 14th, the Australian stock market benchmark index ASX200 rose by 38.30 points, a gain of 0.47%, closing at 8,252.80 points.

Investors widely purchased stocks of well-known companies, including BHP and Rio Tinto. In addition, the Australian ASX All Ordinaries index also rose by 38 points, a gain of 0.45%, reaching 8,529.50 points.

At the same time, as of the time of writing, the Australian dollar fell by 0.2% against the US dollar, reporting 67.37 US cents.

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Although there were several sectors that declined, the materials, healthcare, and financial sectors closed higher, which was enough to push the ASX200 higher.

Among them, the materials sector performed the best, rising by 1.34%, successfully rebounding from recent declines.

The report said that the rise in materials stocks mainly came from the statement made by Chinese Finance Minister Lan Fu'an at a press conference last Saturday.

He stated that China would use increased borrowing to promote national economic growth.

According to Lan Fu'an, the raised funds will be used in four key areas: resolving local debt risks, providing subsidies to low-income groups, promoting the real estate market to stop falling and stabilize, and supporting state-owned banks to replenish capital.China has launched its fourth major economic stimulus plan in the past 16 years, as the world's second-largest economy faces a series of challenges, including deflationary pressures, declining consumer spending and confidence, and a weak real estate market.

While discussions of the stimulus plan have excited local investors, Lan Fuan did not disclose how much the government will invest in these projects.

It is also uncertain whether these measures will be formally incorporated into legislation and whether additional bonds will be issued. However, the market expects both measures to occur in the coming weeks.

Anthony Doyle, head of investment strategy at Firetrail, noted that China's economic stimulus plan is a major topic on the Australian Securities Exchange (ASX).

He explained: "All discussions are related to China, and the market is speculating whether or not the authorities will announce specific stimulus plans."

"The ASX performed well, as resources and mining account for a significant portion of the Australian market and have driven the ASX to near historical highs today."

Despite the Chinese government not disclosing the specific amount of funding for the measures, investors in the local Australian market still view this as a signal to buy resource stocks, with companies including South32 and Fortescue also ranking among the top 5 purchased companies in the ASX200.

Doyle pointed out that Monday's market trend was mainly driven by the improvement in the economic backdrop."As inflation subsides, the US cuts interest rates, and China seeks economic stimulus, global markets are increasingly open to the possibility of a 'soft landing,' with investors in a generally optimistic mood, accepting a slow but sustained market rise."

On Monday, the "winners" were large resource companies, including Regis Resources Limited and Bellevue Gold, which rose by 6.02% and 4.41% respectively.

Others that performed strongly included West African Resources, South32 Limited, and Sandfire Resources.

On the other hand, consumer discretionary and information technology stocks declined, with Webjet falling by 35% due to a weak outlook, while Tabcorp, TPG Telecom, The Star, and Corporate Travel Management also experienced significant drops.