Chinese Stocks: Too Late to Short, Too Early to Buy? What to Look Out For
Chinese equities have continued where they left off in 2023 with the Hang Seng Index (HSI) already down 8% in the new year. China stocks extended their decline as disappointing economic data and Premier Li Qiang's comments on avoiding massive stimulus weighed on the market.
The Hang Seng Tech Index in Hong Kong recorded its largest two-day drop since October 2022, while the NASDAQ Golden Dragon China index hit its lowest point since November 2022. Economic concerns persisted with a significant fall in China's property sector, witnessing the steepest decline in home prices in nearly nine years.
Moreover, deflation risks increased as a measure of broad price changes experienced its lengthiest stretch of quarterly declines since 1999. Premier Li Qiang emphasized in Davos that China refrains from employing massive stimulus to drive economic development.
China's economy faces ongoing challenges, which has started to prompt pro-growth policy initiatives. Anticipating GDP growth around mid-4% in 2024, the government aims to strengthen fiscal stimulus, especially with persistent property market weaknesses. Many investors and analysts expect accommodative monetary policies to persist.
China's economy rose 5.2% in the fourth quarter from a year earlier, according to the official data released on Wednesday. Analysts were looking for +5.3%.
«The full-year numbers were in line with expectations but the December numbers were mixed. Overall, I think the data, especially from the property side, is not looking good. Property sales weakened worse than November levels,” said Woei Chen Ho, an economist at UOB, Singapore.
»I think markets were disappointed they didn't cut interest rates on Monday, but it seems they are thinking about more
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