China Stocks Surge on Stimulus Hopes

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China’s Economic Initiatives Spark Surge in Thai petrochemical and Energy Sectors

bangkok, Thailand – A palpable optimism is sweeping through Thailand’s petrochemical and energy markets, driven by a confluence of positive developments emanating from China and easing global trade tensions. Several key thai companies experienced meaningful upticks in their trading values and share prices, reflecting investor confidence in the “china Play” narrative.

The Siam Cement Public Company Limited (SET: SCC) saw its stock climb by a notable 4.69%, adding THB 8.00 to reach THB 178.50, with a ample trading volume of THB 981.57 million.Indorama ventures Public Company Limited (SET: IVL) also posted impressive gains, expanding by 5.94% or THB 1.20 to trade at THB 21.40 on a trading value of THB 305.32 million. PTT Global Chemical Public Company Limited (SET: PTTGC) similarly rose by 4.44% or THB 2.00, trading at THB 47.00 with a value of THB 422.22 million.

This positive momentum is attributed by Maybank Securities (Thailand) to the recent U.S.-China trade talks, which have helped to de-escalate trade tensions. Coupled with this, China’s introduction of new economic stimulus measures has provided a significant tailwind for companies with strong ties to the Chinese economy, particularly those in the petrochemical and energy sectors. Maybank specifically highlighted PTTGC, IVL, SCGP, and SCC as beneficiaries within the petrochemical sphere, alongside oil and refinery companies such as PTT Exploration and Production Public company Limited (SET: Pttep), Star Petroleum Refining Public Company Limited (SET: Spit), and Bangchak Corporation Public Company Limited (SET: BCP).

PTTEP’s stock saw a modest increase of 0.93% or THB 1.00 to THB 109.00,supported by THB 195.85 million in trading value. Meanwhile, SPRC rose by 1.94% or THB 0.10 to THB 5.25, with a trading value of THB 21.63 million, and BCP gained 1.69% or THB 0.50 to THB 30.00 on a trading value of THB 40.33 million.

Further bolstering sentiment, Krungsri Securities (KSS) points to the Chinese government’s proactive measures to support its real estate sector. plans include the relaunch of the Shanty Town Redevelopment program, injecting much-needed liquidity and stimulating new construction. These initiatives have fueled market expectations for substantial financial support, perhaps reviving the property market. The analyst noted that Chinese property stocks have experienced their most significant rally in nine months, with the Bloomberg Intelligence Index for the sector surging by as much as 11%.

KSS believes these positive developments in China’s property market will also have a beneficial spillover effect on Thai stocks with exposure to the Chinese market, including SCGP, SCC, and IVL.

Looking ahead, KSS anticipates PTTGC’s losses in the second quarter of 2025 to shrink compared to the preceding quarter. This improvement is expected to be driven by ongoing cost reductions in its petrochemical operations, enhanced access to cost-effective ethane feedstock, and a strengthened financial position following the divestment of non-core assets and potential recognition of tax-free gains. The positive impact of China’s fiscal stimulus and a projected 2.4% drop in average oil prices are also seen as supportive factors for the company’s product spread prospects.

For SCC, KSS forecasts second-quarter net profit for 2025 to be the highest of the year, with an anticipated surge of 321% year-on-year and quarter-on-quarter, largely attributed to one-time gains.Even when these exceptional items are excluded, the company’s normalized profit is expected to climb by a significant 246% quarter-on-quarter, supported by a recovery in margins across its cement and petrochemical businesses, as well as dividend payouts.

What potential impacts could increased debt levels, similar to those experienced after the 2008 stimulus, have on the current rally in China stocks?

Market Overview: A Important Rally

Chinese stock markets experienced a substantial rally today, July 11, 2025, fueled by growing optimism surrounding potential government stimulus measures.The shanghai Composite Index jumped 3.2%, while the Hang Seng Index in Hong Kong saw a gain of 2.8%. this surge marks a significant turnaround after months of underperformance, driven by concerns over China’s economic recovery and the property sector. Investors are closely watching for concrete policy announcements that could bolster economic growth. Key sectors driving the gains include technology,financials,and consumer discretionary.

Key Drivers Behind the Surge

Several factors are contributing to the positive market sentiment:

Anticipation of Fiscal Stimulus: Rumors of a large-scale infrastructure spending package are circulating,aiming to boost domestic demand. This potential stimulus is expected to focus on new energy vehicles, artificial intelligence, and advanced manufacturing.

Easing Monetary Policy: Expectations are rising that the People’s Bank of China (PBOC) may further lower interest rates or reduce the reserve requirement ratio (RRR) to increase liquidity in the financial system. Recent comments from PBOC officials suggest a willingness to support economic growth.

Property Sector Support: The government is signaling a potential easing of restrictions on the property market, including potential adjustments to mortgage rates and down payment requirements. This is a critical move, given the sector’s significant impact on the Chinese economy.

Positive Corporate Earnings: Some early corporate earnings reports have exceeded expectations, indicating resilience in certain sectors despite the broader economic challenges.

Foreign Investor Sentiment: While still cautious, foreign investors are showing renewed interest in Chinese equities, encouraged by the potential for policy support and attractive valuations.

Sector-Specific Performance

The rally isn’t uniform across all sectors. Here’s a breakdown of how key industries are performing:

Technology: Tech giants like Alibaba, Tencent, and Baidu led the gains, benefiting from expectations of government support for innovation and digital change. The focus on AI is particularly driving investor interest.

Financials: Banks and insurance companies are also performing well, anticipating increased lending activity and improved economic conditions.

Consumer Discretionary: Companies catering to domestic consumption, such as automakers and retailers, are benefiting from the prospect of increased disposable income due to potential stimulus measures.

Real Estate: While still facing challenges, property developers saw a modest rebound as investors anticipate policy easing. However, significant risks remain in this sector.

Energy: Energy stocks are experiencing moderate gains, supported by global oil price increases and china’s continued demand for energy.

Impact of Government Policies

The chinese government has been under pressure to deliver stronger economic support after a slower-than-expected recovery from the COVID-19 pandemic. Recent policy signals suggest a shift towards a more proactive stance:

1. Infrastructure Investment: Plans for increased investment in infrastructure projects, particularly in renewable energy and transportation, are gaining traction.
2. Tax cuts: Potential tax cuts for businesses and individuals are being considered to stimulate economic activity.
3. Support for Private Sector: The government is emphasizing the importance of supporting the private sector and fostering a more favorable business surroundings.
4. Regulation Adjustments: Some regulatory tightening measures implemented in the past are being reviewed, potentially easing pressure on certain industries.

Risks and Challenges Remain

Despite the current optimism, several risks and challenges remain:

Global Economic Slowdown: A slowdown in the global economy could dampen China’s export growth and overall economic performance.

Geopolitical tensions: Ongoing geopolitical tensions, particularly with the United States, could create uncertainty and disrupt trade relations.

Property Sector Debt: The high level of debt in the property sector remains a significant concern, and a potential default could trigger broader financial instability.

Demographic Challenges: China’s aging population and declining birth rate pose long-term challenges to economic growth.

Youth Unemployment: High youth unemployment rates continue to be a concern, potentially leading to social unrest.

Investing in chinese Stocks: Practical Tips

For investors considering exposure to Chinese stocks, here are some practical tips:

Diversification: Diversify your portfolio across different sectors and asset classes to mitigate risk.

Long-Term Outlook: Adopt a long-term investment horizon, as Chinese markets can be volatile in the short term.

Due Diligence: Conduct thorough research on individual companies before investing.

consider ETFs: exchange-Traded Funds (ETFs) offer a convenient way to gain exposure to a broad range of Chinese stocks. Popular options include the iShares MSCI China ETF (MCHI) and the Vanguard FTSE China ETF (VWO).

Stay Informed: Keep abreast of the latest economic and political developments in China.

* Risk Tolerance: assess your risk tolerance before investing in emerging markets like China.

Past Context: Past Stimulus Measures

China has a history of implementing large-scale stimulus measures to counter economic slowdowns. Such as, in 2008, following the global financial crisis, China launched a massive stimulus package focused on infrastructure investment. This package played a significant role in mitigating the impact of the crisis on the Chinese economy. Though, it also led to increased debt levels and inefficiencies.The current situation differs in that the focus is