Chinese stocks close to bull market after Lunar New Year holiday returns

Tourists walk under colorful lanterns at the tourist resort of Nangong in Beijing during the Spring Festival holiday on January 23, 2023 in Beijing, China. The Chinese Lunar New Year, or Spring Festival, falls on January 22.

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China’s onshore A-shares were hovering near bull market territory on Monday, the first day after returning from the Lunar New Year holiday.

The CSI 300, which tracks shares of the largest companies listed in Shanghai and Shenzhen, closed at 4,201.35 on Monday, up 19.74% from its recent low of 3,508.7 seen on Oct. 31. from last year, according to data from Refinitiv.

A bull market is technically defined as a period when stocks rise at least 20% from recent lows.

Markets in mainland China were closed for a full week to observe the Lunar New Year holiday. Official data showed travel and consumer spending increased from a year ago – domestic tourism revenue jumped 30% from 2022 to 375.84 billion yuan ($55 billion). dollars), although they were lower than expenditures in 2019, before the pandemic.

The ChinaAMC CSI 300 Index ETF, which tracks the performance of the index, rose 18% from its October lows on Monday.

Chinese Premier Le Keqiang has pledged to make consumption the “main driver of the economy”, according to a brief from the State Council meeting over the weekend. The meeting also underscored the importance of stabilizing growth, employment and foreign trade, according to the statement.

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“China A-share New Year bulls were mainly boosted by stimulative monetary policy and reopening optimism,” CMC Markets analyst Tina Teng told CNBC in an email.

She added that supportive measures in the real estate sector and an eased crackdown on Chinese tech companies fueled further gains.

“Investors are shifting their funds from fixed-income markets to equity markets amid progress in China’s reopening,” Teng said.

Spring gathering in sight

Hao Hong, chief economist at GROW Investment Group, said China’s excess household savings would support a further rise in stock prices.

“We are at the start of intense speculation. Chinese savings glut [took] as a sign of extreme risk aversion may be fuel for a springtime rally,” he said in a Sunday note.

“As households start spending and saving less again, the economy will recover and the market will respond,” he added. “It’s the Year of the Rabbit, and the market has come alive.”

Min Chen, head of portfolio manager for China at Somerset Capital, said the Chinese economy will outperform its global peers in 2023.

“We expect Chinese policymakers this year to have a lot of leeway to further support the economy,” he said, adding that he expects support measures for ownership and sees “signals of deregulation” for tech platform companies.

“It means China has a good chance of standing out as a fast-growing economy this year against the backdrop of a global economic slowdown,” he said on CNBC’s “Street Signs Asia.”

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