(Bloomberg) — Hong Kong-listed Chinese stocks erased Wednesday’s initial losses as trading resumed after the Lunar New Year holiday, with investors focused on what more Beijing can do to stem the slide. are doing.
Most Read Articles on Bloomberg
The Hang Seng China Enterprise Index, which tracks Chinese stocks traded in Hong Kong, rose as much as 0.6% after paring an intraday decline of as much as 1.9%. Hong Kong’s stock benchmarks have also largely reversed their early losses. Investors are still trying to gauge Chinese authorities’ willingness to prevent a deepening setback, as well as the overnight fall in U.S. markets on stronger-than-expected inflation readings.
“More comprehensive easing measures are still needed to address macro issues in the long term,” Shi Hu, China portfolio strategist at Goldman Sachs Group, said in an interview on Bloomberg TV. Investors want “long-term plans to address real estate and local government debt issues” and direct stimulus to boost spending, he added.
China’s efforts, from state-led stock purchases to short-selling bans, have had a limited impact on the mainland’s stock market recovery. Structural issues such as deflationary pressures, the real estate crisis and tensions with the West continue to weigh on investors.
Bank of America’s latest survey of Asian fund managers shows that investment in China has fallen to an all-time low, and Chinese households will continue to hold on to cash rather than spend or invest. This shows that investors accept this idea.
Trading clues that emerged during Hong Kong’s Lunar New Year holiday are mixed.
China’s credit growth rate hit record high in January, Citigroup Inc. says Macau casinos are off to a strong start for the Lunar New Year holiday, with mainland visitors seeing the highest number of 2019 visitors in the first three days. It said it was an increase of 34% compared to the comparable period. Casino-related stocks rose 2.7%.
Meanwhile, MSCI announced it would remove a number of battered Chinese stocks from its index, while Hong Kong’s main housing estates recorded zero deals during the Lunar New Year holiday for the first time since records began in 2010. The European Union has proposed new trade restrictions on about 20 companies accused of supporting Russia’s war effort in Ukraine, three of which are based in China.
From a macro perspective, investors are weighing concerns about the Chinese government, including a possible interest rate cut in an announcement scheduled this month and a possible increase in government spending at the annual meeting of the National People’s Congress in early March. We will be watching closely for further policy signals.
“There may be a rate cut, but the focus will be primarily on fiscal support and the potential budget expansion announced at the biannual policy meeting in early March,” said Marvin Chen, a strategist at Bloomberg Intelligence. Stated.
–With assistance from David Ingles.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP