Traders are now turning their attention to policy signals ahead of the Communist Party’s Oct 20 to 23 meeting, where the blueprint for the 15th five-year plan will be outlined
[HONG KONG] China’s stock market opened higher on Thursday (Oct 9) after a weeklong break, as investors opted to focus on artificial intelligence (AI)-driven growth over tepid holiday spending data.
The onshore CSI 300 Index rose as much as 0.6 per cent after the opening. A gauge of Chinese shares listed in Hong Kong fell 0.3 per cent, extending the 0.3 per cent decline logged while mainland markets were shut.
Lingering signs of economic sluggishness, reflected in underwhelming holiday spending, were not enough to dampen investor enthusiasm for AI. Some investors remained hopeful that the global AI frenzy, fuelled by companies touting OpenAI ties and sending tech stocks to fresh highs while China was closed, would spill over into Chinese markets.
“There’s been a bunch of news around OpenAI that’s positive on AI sentiment that happened during the China holiday that isn’t reflected in share prices,” said Xin-Yao Ng, a fund manager at Aberdeen Investments. “There will be some catching up to do.”
Traders are now turning their attention to policy signals ahead of the Communist Party’s Oct 20 to 23 meeting, where the blueprint for the 15th five-year plan will be outlined. The Trump-Xi meeting at next month’s Apec summit in South Korea could add another catalyst if tariff talks resume.
The CSI 300 Index has climbed for five straight months to September, its longest winning streak since 2017, led by enthusiasm over chip stocks after DeepSeek’s unveiling of an updated AI model and Huawei Technologies’ plan to double output of its top AI chips.
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Despite the rally, Chinese equities remain much cheaper than their peers. The MSCI China Index traded at below 14 times forward earnings, far below the S&P 500’s valuation at 23 times, according to Bloomberg-compiled data.
“If high-growth Chinese names, particularly in the Internet space, can deliver on their potential earnings, they are looking very attractive relative to global peers,” said Ian Samson, a multi-asset portfolio manager at Fidelity International in Singapore.
Weak spending
Golden Week spending reflected consumers’ budget-conscious behaviour. Travel and experiences remain a priority, but box office figures and airline demand disappointed.
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Movie stocks, including Maoyan Entertainment and Damai Entertainment Holdings, fell on Wednesday in Hong Kong after Citigroup flagged weak ticket sales. Morgan Stanley noted a shift from air and rail to highway travel, with private car passenger volume up 6 per cent year on year during the Golden Week.
Average passenger traffic for all travellers was up almost 7 per cent year on year in the first seven days, according to a Bloomberg tally of the Ministry of Transport’s data. That’s a decline from the 8 per cent surge during the five-day Labour Day holiday in May.
Golden Week data point to persistent consumption weakness in China, which may prompt profit-taking in consumer-related stocks, according to Julius Baer analysts.
Post-holiday package
Late last month, China introduced a 500 billion yuan (S$91 billion) capital injection to spur investment, part of a long-anticipated “new financing policy tool”.
Markets expect a “favourable post-holiday policy package”, reflected in gains among brokerages, a sentiment-sensitive sector, said Daniel Tan, a portfolio manager at Grasshopper Asset Management.
“We anticipate a stronger focus on reflating domestic demand, with anti-involution measures likely to be in the spotlight,” said Xingchen Yu, emerging markets strategist at UBS Global Wealth Management. Effective policies to tackle deflation could help unlock excess savings and boost consumption, he added.
Yuan strength
The offshore yuan dipped 0.3 per cent against the US dollar during the holiday but remains up more than 2 per cent this year amid growing appetite for Chinese assets.
Traders are watching the People’s Bank of China’s daily reference rate for policy signals as onshore markets reopen. The central bank’s fixing, expected to resume on Thursday, is likely to convey stability and provide an anchor to regional currencies, said Fiona Lim, senior foreign-exchange analyst at Malayan Banking Berhad.
“Much of the onshore yuan performance will depend” on the fixing, she said, expecting resilient exports and demand-side stimulus to propel the yuan to strengthen to around 7.07 per US dollar by year-end. BLOOMBERG
