(Bloomberg) — Chinese stocks have reopened after the Lunar New Year holiday, but it’s not as hot as investors had hoped, with strong travel and spending data not being enough to allay concerns about the broader economy. was suggested.
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Just as a surge in tourism, box office ticket sales and Macau casino visitors boosted Chinese stocks listed in Hong Kong and the U.S. when mainland markets were closed from Feb. 9 to 16. , expectations were growing that the benchmark CSI 300 index would rise significantly.
Instead, Gage struggled to gain traction for most of the day, only increasing his pace to 1.2% in the afternoon. This slow rise comes in tandem with a surge in volume for some exchange-traded funds, suggesting that China’s state funds, the so-called national teams, are lending a helping hand.
Foreign investors sold domestic stocks on Monday, underscoring the need for Beijing to do more to restore confidence as the economy struggles with deflation and a real estate crisis. Ahead of the holiday, regulators made a number of regulatory adjustments to ease selling pressure and, in an unexpected move, removed the head of the securities regulator.
“Investors expected China’s economy to recover and reopen after a change in the head of the securities regulator and better-than-expected holiday spending data,” said Daniel Tan, portfolio manager at Grasshopper Asset Management. , which was somewhat disappointing.” Investor confidence remains low, so “every small rally is met with a new selloff,” he added.
Hong Kong stock indexes have risen nearly 5% in three sessions since trading resumed on Wednesday, while the Nasdaq Gold Dragon China Index rose 4.3% last week.
Premier Li Qiang called for “real and strong” action to boost confidence in the economy at a State Council meeting on Sunday, underscoring the government’s concerns over the sluggish economic recovery and falling stock prices.
Read more: Chinese PM calls for ‘coercive’ action to boost confidence
A detailed study by economists at Nomura Holdings Inc. and Goldman Sachs Group Inc. found that despite an increase in overall travel, Chinese tourists remain frugal, reducing per capita tourism during the eight-day festival. Revenues were shown to have decreased by 9.5% compared to a similar period in 2019. .
“It is noteworthy that this year’s Lunar New Year holiday lasted for eight days compared to seven days in 2019,” said Redmond Wong, market strategist at Saxo Capital Markets. “Furthermore, average tourism spending per trip also decreased from 2019 levels.”
Meanwhile, foreign investors sold more than 6 billion yuan ($834 million) in mainland stocks on Monday. Global funds are exiting Chinese stocks and seeking alternatives in other markets such as India and Japan.
Traders are hoping for further policy support across the monetary and fiscal sectors, on top of the reserve requirement reductions already in place. China refrained from lowering its key policy interest rate on Sunday as the People’s Bank of China seeks to prevent fluctuations in the yuan. Some economists expect commercial lenders to cut loan prime rates on Tuesday.
Tech stocks in the CSI300 index stood out on Monday. Cambricon Technologies and Zhongji Innolight soared more than 16% as Chinese artificial intelligence companies reacted to OpenAI’s announcement of Sora, a new system that can create realistic-looking videos. Healthcare stocks fell the most.
In Hong Kong, the Hang Seng Chinese Enterprise Stock Index closed 1.3% lower, marking a third straight day of gains.
Dickie Wong, executive director of research at Kingston Securities, said, “Today’s Hong Kong market is seeing some profit-taking in Macau casino operators and other companies following strong data from the Lunar New Year holiday.” Stated. Mr Wong added that the prime rate for five-year loans could be lowered.
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A new Bank of America Corporation survey of asset managers reveals that shorting Chinese stocks has become popular in recent months, making them the second-busiest trade. Ta. A third of respondents said they would increase their allocation if more aggressive fiscal policy was expected to support the real estate sector.
Any signs of stimulus will therefore be closely watched ahead of the country’s key annual meeting in March, when the leadership will announce its economic growth and development targets.
“In terms of tourist spending, most of it comes from traffic, and when you look at average spending, austerity is still there,” said Willer Chen, an analyst at Forsyth Barr Asia. .
–With assistance from Charlotte Yang and Ishika Mookerjee.
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