China's stock market returned from the week-long Lunar New Year holiday in a cheerful mood, catching up with Hong Kong's rally, and with sentiment boosted by some better economic news.
The Shanghai Composite Index CN:SHCOMP jumped 1.6% on Monday after data showed citizens made more than 61 million rail trips during the six days of the national holiday, a 61% rise from a year earlier and the most in the past five. years, according to Bloomberg.
Domestic tourism spending rose 47.3% to 632.7 billion yuan ($88 billion) compared to the same holiday period in 2023, according to the Ministry of Culture and Tourism.
The increase in holiday activity and spending suggests Chinese households are starting to feel more confident after a period of weak consumption and relatively anemic GDP growth, as the world's second-largest economy struggles with deflationary pressures and a faltering property market.
In fact, data released Sunday by the State Administration of Foreign Exchange showed that direct investment by foreign companies in China, as measured by liabilities in the country's balance of payments, reached $33 billion in 2023, the lowest level since the early 1990s, according to Bloomberg calculations. .
Stock markets in mainland China have been closed since February 9, with the Shanghai Composite Index down more than 12% year-to-date after hitting a four-year low earlier in February, when investors grew frustrated. Due to the lack of significant financial support. By Beijing.
However, during the Shanghai Composite Index's downtime, Hong Kong's Hang Seng Index (HK:HSI) rose.,
Which returned from vacation on February 14, rebounded by 3.8%, which supported mainland stocks at the beginning of this week.
Stephen Innes, managing partner at SPI Asset Management, said the latest Chinese data would provide “a relief to policymakers grappling with challenges such as slowing economic growth, deflation risks, weak consumer demand and the collapse of the real estate sector.”
“However, while the boom in tourism provides a glimmer of hope, its long-term sustainability remains uncertain,” Innes added.
Ipek Ozkardskaya, senior analyst at Swissquote Bank, noted that it was the decline in the Chinese stock market that prompted MSCI to remove 66 Chinese companies from the MSCI China Index and the MSCI World Index in its latest quarterly review. “Therefore, the bet on the recovery of the Chinese market is still swimming against the tide, until the wind blows,” she said.
Emma Wall, head of investment analysis and research at Hargreaves Lansdowne, took a more contrarian stance, saying Chinese stocks were worth considering given sentiment had become so poor.
“Although there are question marks over some sectors such as real estate, looking ahead over the next five to 10 years, on a valuation basis this represents an attractive entry point for investment in China,” Wall said.
Elsewhere in Asia, Hong Kong gave up some of its recent gains as the region inherited a weak session on Wall Street on Friday, with the Hang Seng down 1.1% and Japan's Nikkei 225 index (JP:NIK) barely changed to close near record levels.
Activity in Europe was subdued early Monday, as the US market's Presidents' Day closure discouraged traders from betting. The FTSE 100 UK:UKX was little changed in London, while the CAC 40 FR:PX1 in Paris fell 0.3% from its record close on Friday, and the DAX DX:DAX in Frankfurt fell 0.2%.
“The FTSE 100 got off to a slow start to trading on Monday, lacking some direction amid the absence of major economic or corporate data,” said Ross Mould, investment director at AJ Bell.
But Mold added that attention will shift to Wall Street as the week progresses “whenever.” [on Wednesday] Minutes from recent Federal Reserve meeting released and AI Nvidia stock NVDA,
reveals its latest quarterly results.
is reading: Nvidia's earnings report could wipe out the momentum that pushed US stocks higher, no matter how it appears.
However, there were some events going on in Europe. Shares of Polymetal International fell 6% in Moscow after the gold miner said it had struck a deal to sell its entire Russian mining business for $3.69 billion.
Polymetal said it is looking to fully exit the Russian Federation due to the combined threats of Western sanctions and nationalization by Putin's government. In August 2023, the company abandoned its London listing and moved its headquarters from Jersey to Astana, the capital of Kazakhstan, aiming to avoid Russia imposing rules that had designated Jersey an “unfriendly jurisdiction” in response to Western sanctions.
Meanwhile, in Spain, Banco Santander SAN shares rose,
The company's shares rose about 2% after the bank said it proposed increasing its dividend by 50% to 9.50 euro cents and would launch a share buyback worth 1.5 billion euros.
The Santander news lifted the Spanish banking sector and helped the IBEX 35 XX:IBEX index outperform with a gain of 0.3%.
