A key stock market index in Hong Kong saw the biggest single-day drop since the financial crisis on Tuesday.
The Hang Seng index fell by -2172.99 (-9.41 percent) on Tuesday.
The drop followed an announcement on Tuesday by China’s economic planning agency that outlined details of measures aimed at boosting the economy but refrained from major spending initiatives.
Indexes in the region initially surged due to confidence in a large stimulus package being announced by China.
However, the package was much more limited than expected, appearing to disappoint investors who were hoping for bolder moves.
Shanghai’s benchmark lost a 10 percent initial gain after markets reopened following a weeklong national holiday, to trade at just 3 percent higher.
The Hang Seng index was high before today’s announcement, meaning that despite record drops, the index remains up 20 points from last week.
The plans include the government frontloading 100 billion yuan ($14.1 billion) in spending from the government’s budget for 2025 in addition to another 100 billion yuan for construction projects.
The scale of the spending was well below the multi-trillion yuan levels that analysts said might be expected.
The National Development and Reform Commission chairman, Zheng Shanjie, said China was still on track to attain its full-year economic growth target of around 5%.
But he acknowledged the economy faces difficulties and an increasingly “more complex and extreme” global environment.
The Chinese economy has struggled to recover fully since the end of pandemic-era restrictions in late 2022, with low consumer confidence and high youth unemployment continuing to weigh on the recovery.
In September, China revealed its largest stimulus package since the pandemic in a bid to avoid economic setbacks.
The move included lowering the reserve requirement ratio—the amount of cash the country’s banks must hold in reserve—effectively making more funds available for lending to consumers and businesses.
Additionally, the central bank cut the interest rate on its Medium-Term Lending Facility, reducing the rate for one-year loans to financial institutions from 2.3 percent to 2 percent, marking the first such reduction since July 2023.
The situation in the region had worldwide effects on Tuesday, with stocks falling for companies in Europe, the United States and elsewhere with ties to China.
Estee Lauder fell 4.4 percent, while Wynn Resorts lost 4 percent.
Wall Street held firm despite the turbulence in China, and the S&P 500 was 0.6 percent higher in morning trading.
The Dow Jones Industrial Average was up 30 points, or 0.1 percent, while the Nasdaq composite was 1 percent higher, as of 10 a.m. Eastern time.
This article includes reporting from The Associated Press
Pedestrians walk past a sign showing the numbers of the Hang Seng Index in Hong Kong on October 8, 2024. Hong Kong stocks plunged more than nine percent on October 8, their biggest fall in 16 years, after China left investors disappointed by a lack of new stimulus and few details about measures announced last month.
Peter PARKS / AFP/Getty Images
