On Friday, China’s main stock index recorded its strongest surge in two months, sparked by gains in consumer shares as investors anticipated additional policy support for the sector.
The CSI 300 Index rose up to 2.6%, reaching its highest mark of the year, driven by optimism surrounding a forthcoming government press conference on bolstering consumption set to be held on Monday. Additionally, a measure tracking Chinese stocks traded in Hong Kong saw an intraday increase of over 3%.
Anticipation around the press conference fueled hopes for policy interventions, explained Shen Meng of Chanson & Co. However, he cautioned that without concrete details about income enhancements, this optimism might falter.
The stock rally signals renewed confidence in policy stimulus, following the government’s ambitious economic growth goal of approximately 5% set during the National People’s Congress (NPC).
Authorities are reportedly planning to announce policies such as subsidies for consumer trade-in schemes, enhancements to social support services like childcare and elderly care, and measures to promote consumer lending, as noted by analyst Ken Chen from KGI Securities.
China’s financial regulator committed to advancing consumer finance initiatives aimed at stimulating consumption. This includes urging banks to accelerate the issuance of personal-consumption loans. The regulator also promised to enhance financial backing for service sectors such as retail, accommodation, catering, tourism, education, and healthcare.
Furthermore, investors are also keenly awaiting the release of January and February economic data on Monday, hoping for encouraging signs. Forecasts suggest China’s retail sales likely improved, with investments remaining stable compared to last year’s totals, according to economists surveyed by Bloomberg.
Meanwhile, Jeremy Yeo of SMBC Nikko Securities observed that while the consumption boost benefits sector stocks, their ability to maintain gains is uncertain. He noted that further government support in a downturn could bolster the perception of a “Xi put,” suggesting potential intervention to stabilize markets.
