China Indexes Advanced Ahead of Key Economic Data and Earnings Releases

Li Chen
16 May, 2024
Hong Kong

Stocks in Shanghai and Hong Kong advanced ahead of the release of key economic data on Friday and earnings from leading tech companies later in the day. 

Investors have been increasing exposure to Chinese stocks in the hopes that state-controlled companies will support financial markets through steady buying of large-cap companies. 

In Hong Kong, the Hang Seng index advanced after investors returned from a public holiday. 

In active trading, stocks in Hong Kong gained following the easing of core consumer price inflation in the U.S. in April to 3.4%, raising hopes that the Federal Reserve could lower rates two times in the second half of 2024. 

Despite the market enthusiasm, foreign investors are skeptical about the long-term outlook for Chinese stocks as more Chinese companies shift or expand manufacturing in locations outside China. 

Moreover, Chinese authorities are also stepping up oversight and raising barriers for capital repatriations for foreign companies. 

In addition, Chinese banks have yet to book losses stemming from large loans issued to property developers, and current earnings do not reflect the weakness in the loan portfolio. 

The CSI 300 index increased 0.8% to 3,655.44, and the Hang Seng index advanced 1.6% to 19,382.75. 

Market sentiment was also bolstered in the hopes that the latest move by the Hangzhou government will be followed by other regional governments in reviving the property market. 

The Hangzhou City government announced its plans to buy existing homes in the city and rent them affordable housing. The move was designed to inject liquidity into the property market and make homes available to a wider group of families. 

On Friday, the Chinese statistical office is scheduled to release April's retail sales, industrial production, and investments. 

Tech stocks advanced following the surge in the sector in overnight trading in New York and ahead of earnings results from Baidu, JD.com, and Meituan. 

Baidu decreased 0.2% to HK$109.0, JD.com gained 2.4% to HK$132.20, and Meituan advanced 3% to HK$125.60. 

Bank of China, Agriculture Bank of China, ICBC, and China Construction Bank advanced between 3% and 6% in Hong Kong trading in the hopes that interest rates may be lowered following the possible rate cuts in the U.S. 

Li Auto and BYD declined 2%, but Xpeng and Nio gained 1% in Hong Kong trading.