Chinese stocks languish after return from holiday amid risks

BLOOMBERG

Chinese stocks ended lower in a choppy session following their return from the Golden Week break, as investors parsed holiday-spending data while navigating global market volatility.
The CSI 300 Index closed down 0.1% on Monday, its first trading session since September 28.
Risk assets were hammered last week as renewed concern about higher-for-longer US interest rates spurred a Treasuries selloff that rippled through world markets.
The listless resumption came as tourism revenue from China’s Golden Week holiday fell short of government estimates despite a year-on-year jump to above pre-Covid levels. Traders had been pinning hopes on a consumption boost to lift the market, which has been hurt by persistent worries about the property crisis.
“It’s sort of tricky to call [the market] at this point because the external environment has been very complicated,” Hao Hong, chief economist at Grow Investment Group, said in a Bloomberg TV interview.
“There are pluses and minuses, so for a trader, he or she may find it a little difficult to trade the overall index.”
Selling by foreign investors continued as mainland China markets returned from the break. Overseas funds sold 7.5 billion yuan ($1 billion) worth of onshore shares on a net basis via trading links with Hong Kong in Monday’s session, the most since September 25.
Home sales during the vacation period slumped from September’s levels, underscoring China’s struggle to arrest a record housing-market slump that’s stifled economic growth and weighed on the world’s second-largest stock market.
Goldman Sachs Group Inc analysts said while China is likely to roll out more housing easing measures in the next few quarters, the sector is still expected to see an L-shaped recovery in the coming years.
A Bloomberg Intelligence gauge of Chinese developers slumped as much as 3.5% as Hong Kong trading resumed in the afternoon. The market’s morning session was cancelled due to a typhoon. More broadly, a Hang Seng gauge of Chinese shares listed in Hong Kong rose 0.4% on Monday, aided by gains in energy-related stocks following oil’s rally.
It had fallen 0.3% in the period that mainland markets were closed.
Overall, pessimism toward Chinese markets remains prevalent, with the CSI 300 Index down 4.8% for the year and less than 5% away from erasing all its gains from the reopening rally that took off in October 2022. Travel- and leisure-related stocks dropped on Monday as some traders saw the holiday data as disappointing.
Air China Ltd and China Southern Airlines Co fell at least 1.6% each, while UTour Group Co plunged more than 9%. Chinese equities are weighed down by “a bit of negatives from couples of aspects” that include a slight miss in holiday spending numbers, said Willer Chen, senior research analyst at Forsyth Barr Asia Ltd.