Hong Kong stocks set for best week since 1998, China since 2008 on stimulus impact

Chinese markets are set for their best week in almost 16 years as the mainland’s CSI 300 is poised for a nearly 15% rally this week, powered by the central bank announcing and releasing economic stimulus measures.

The last time the index saw a bigger weekly gain was the week ending Nov. 14, 2008.

Hong Kong’s Hang Seng index is set for a weekly gain of 12.85%, its best week since February 1998 according to FactSet data.

On Friday, the CSI 300 climbed almost 4% and the HSI rose 3.5%, as the People’s Bank of China cut its 7-day reverse repurchase rate to 1.5% from 1.7%, as well as slashing the reserve requirement ratio of financial institutions by 0.5 percentage points.

The PBOC said the RRR cut was intended to help “create a good monetary and financial environment for China’s stable economic growth and high-quality development,” according to a statement translated by Google.

China also released its industrial profit data for August, which saw a 17.8% plunge year on year. The drop follows a 4.1% year-on-year increase in July, the fastest pace in five months.

On a year-to-date basis, profits at large industrial firms grew at 0.5% to 4.65 trillion yuan ($663.47 billion) for the first eight months, compared with 3.6% in the first seven months.

As this data is up to August, investors will have to wait for the next batch of data to assess the effects of Tuesday’s stimulus measures.

Separately, at about 11 a.m. Shanghai time, the Shanghai Stock Exchange reported that it was having “abnormal [and] slow transaction” in stock auctions since the market opened at 9:30 a.m.

The exchange said in a release that it was investigating the issues, according to a Google translation.

Other Asia-Pacific markets also mostly rose Friday, with investors also assessing September inflation numbers from Japan’s capital city of Tokyo, which is widely considered a leading indicator of nationwide trends.

Tokyo’s headline inflation rate eased to 2.2%, down from August’s 2.6%.

The core inflation rate — which strips out prices of fresh food — in the capital city came in at 2%, in line with expectations from economists polled by Reuters and down from 2.4% in August.

Japan’s Nikkei 225 rose 0.81%, while the broad based Topix fell 0.18% after the CPI reading was announced. The Japanese yen weakened more than 1% against the U.S. dollar, hitting a three-week high and trading at 146.38.

This comes as Japan’s ruling party elects the successor to outgoing Prime Minister Fumio Kishida. The leading candidate from the first round of voting is economic security minister Sanae Takaichi, who has advocated for a dovish monetary policy and prefers that the Bank of Japan would hold off on interest rate hikes.

South Korea’s Kospi was down 0.21%, while the small-cap Kosdaq 0.27% lower.

Australia’s S&P/ASX 200 climbed 0.10%, about 30 points away from its all-time high of 8,246.2.

Overnight in the U.S., all three major indexes rose, with the S&P 500 hitting a new record following the release of upbeat U.S. economic data.

The broad market index climbed 0.40% to 5,745.37, lifted by gains in Micron Technology. The Nasdaq Composite added 0.60%, and the Dow Jones Industrial Average advanced 0.62%.

A slate of fresh U.S. economic data also supported the market’s gains, with weekly jobless claims falling more than expected, pointing to a steady labor market.

Seperately, the final reading of the U.S.’ second-quarter GDP was unrevised at a strong 3%.

—CNBC’s Lisa Kailai Han and Brian Evans contributed to this report.

Clarification: The story has been updated to reflect the new reverse repo rate.