China stocks rally on $137bn sovereign bond issue plan

Chinese stocks jumped in early trade on Wednesday after the country's top parliamentary body approved an additional 1 trillion yuan ($137 billion) sovereign bond issue to support the world's second largest economy.

The boost in fiscal stimulus demonstrated the top leadership's commitment to boosting economic growth even as the 5 per cent full year GDP growth target is almost guaranteed, analysts said.

China's blue-chip CSI 300 Index .CSI300 rose 1.1 per cent, while the Shanghai Composite Index .SSEC climbed 0.9 per cent.

Infrastructure stocks .CSI930608 shone, advancing more than 3 per cent.

In Hong Kong, the Hang Seng Index (HSI) jumped 2.3 per cent and the Hang Seng Tech .HSTECH surged 4.5 per cent.

The issuance of extra sovereign debt will widen the country's 2023 budget deficit to around 3.8 per cent of gross domestic product (GDP) from a previously set 3 per cent, state media Xinhua said.

"It came to the market as a surprise. China rarely revise its budget," said Zhiwei Zhang, chief economist of Pinpoint Asset Management.

"Part of the funds raised will be utilized next year, hence this helps to boost growth outlook beyond Q4."

The Standing Committee of the National People's Congress also passed a bill to allow local governments to frontload part of their 2024 bond quotas.

Overnight US-listed Chinese stocks .HXC rallied 4 per cent.