(Bloomberg) — Chinese stocks saw modest gains as onshore traders returned from the Lunar Recent Yr holidays, with broader caution toward the market offsetting buoyant travel and spending data.
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The benchmark CSI 300 Index climbed 0.5% as of 10:56 a.m. local time on Monday, belying expectations of a bullish open after the Feb. 9-16 break. A gauge of stocks in Hong Kong had rallied nearly 5% in three sessions because it reopened on Wednesday while the Nasdaq Golden Dragon China Index jumped 4.3% last week.
Monday morning trading shows that doubts run deep over the China market’s longer-term prospects because the economy struggles with deflation and a property crisis. Investors were expecting a rally onshore after state media reported that about 474 million domestic tourist trips were made in the course of the eight-day holiday, up 19% from the identical period in 2019 before the pandemic.
“Onshore markets could also be reopening with some positive momentum after holiday spending data was higher than expected, but given the strong rebound entering the vacations it’ll take more measures to be sustained,” said Marvin Chen, strategist at Bloomberg Intelligence.
Mainland stocks had rallied ahead of the vacations as authorities sought to revive investor confidence, with state funds ratcheting up purchases, a slew of regulatory tweaks to scale back selling pressure and a surprise alternative of the securities regulator chief. The benchmark CSI 300 Index rebounded from a five-year low and climbed 5.8% within the week before the break.
Premier Li Qiang called for “pragmatic and forceful” motion to spice up confidence within the economy at a gathering of the State Council on Sunday, underscoring the federal government’s concern with a struggling recovery and stocks rout.
“When it comes to tourist consumption numbers, many of the beat comes from the traffic numbers and in case you take a look at average spending, austerity still exists,” said Willer Chen, an analyst at Forsyth Barr Asia Ltd.
Foreign funds offloaded greater than 3 billion yuan ($416 million) of mainland shares as of mid-morning. Global funds have been opting out of Chinese stocks and in search of alternatives in other markets reminiscent of India and Japan.
Traders wish to see further policy support across the monetary and financial space, along with a cut within the reserve requirement ratio already undertaken. China avoided lowering a key policy rate of interest on Sunday as its central bank sought to shield the yuan from volatility. Some economists expect industrial lenders to scale back their loan prime rates on Tuesday.
Tech stocks on the CSI 300 Index stood out on Monday. Cambricon Technologies Corp. and Zhongji Innolight Co. jumped greater than 8% as Chinese names related to artificial intelligence responded to OpenAI’s unveiling of its latest system, called Sora, that may create realistic-looking videos. Healthcare shares fell essentially the most.
In Hong Kong, the Hang Seng China Enterprises Index slid greater than 1% to snap a three-day advance.
“There’s some profit taking in Hong Kong market today reminiscent of with the Macau casino operators after strong data prints of the Chinese Recent Yr holiday,” said Dickie Wong, executive director of research at Kingston Securities Ltd. The following thing to look at is a possible lowering of the five-year loan prime rate, Wong added.
The newest Bank of America Corp. survey of cash managers showed that going short Chinese stocks, which has been the second-most crowded trade for months, is rising in popularity. A 3rd of the respondents said they may increase their allocation in the event that they see more aggressive fiscal policy to spice up the actual estate sector.
Any stimulus signs emerging ahead of the important thing annual meetings in March, where the leadership declares the economic growth goal and development goals, will thus be closely watched.
“It’s price noting that this yr’s Lunar Recent Yr holiday spanned eight days, in comparison with the seven days in 2019,” said Redmond Wong, market strategist at Saxo Capital Markets. “Moreover, the common tourism spending per trip declined from the degrees in 2019 as well.”
–With assistance from Charlotte Yang.
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