SHANGHAI – China’s benchmark equity gauge was set to enter a bull market as trading resumed after a week-long Chinese New Year break, with a rebound in consumption reinforcing optimism that the economic outlook is improving.
The CSI 300 Index jumped as much as 2.1 per cent early on Monday, taking its gains from an October low to more than 20 per cent. Spending patterns showed that travellers swarmed China’s scenic destinations during the holiday, box office sales rose and bookings of hotels, guest houses and tourist spots exceeded the comparable period in 2019.
The stream of positive data sets the ground for Chinese equities to rally further, extending their outstanding rebound following the rollback of virus curbs and a policy pivot by Beijing late last year. Analysts at Citigroup said their forecast of 5.3 per cent growth for China’s economy this year could be raised with pent-up demand driving an earlier-than-expected recovery, while Jefferies Financial Group anticipates upgrades in earnings estimates following the holiday.
“The onshore market is catching up with the performance of Hong Kong and United States markets during the Chinese New Year,” said Mr Willer Chen, senior analyst at Forsyth Barr Asia. “The market is very excited about the holiday data,” he said, adding that the details still show a mixed picture and stocks can go lower during the day.
Market seasonality suggests that A-shares perform strongly after the Chinese New Year, averaging an increase of 2 per cent in the week afterwards during the past decade, with a 70 per cent chance of gains, Goldman Sachs Group strategists wrote in a note.
Overseas investors purchased another 9.9 billion yuan (S$1.9 billion) worth of mainland stocks as at 9.52am., increasing positions in all but one session this month to take total purchases to 122 billion yuan.
Shares in Hong Kong traded lower on Monday, having climbed last week after the holidays. The Hang Seng China Enterprises Index, which tracks Chinese stocks listed in Hong Kong, fell as much as 1.3 per cent. BLOOMBERG
