China stocks trade higher as annual parliamentary meeting ends
A man takes photos near red flags on Tiananmen Square before the closing session of the Chinese People’s Political Consultative Conference (CPPCC) in Beijing, Sunday, March 10, 2024. The CPPCC is an advisory body to the National People’s Congress which will close Monday. (AP Photo/Ng Han Guan)
HONG KONG (AP) — Chinese stocks ended Monday with gains on Monday as the country’s national legislature ended its annual meeting.
The Hang Seng Index added 1.3% to 16,570.86, again led by the tech index, which surged by 2.7%. Among gainers, JD.com jumped 6.6% to 98.75 Hong Kong dollars, E-commerce giant Alibaba Group Holding gained 2%, and Tencent was 3.2% higher.
Elsewhere in China, the Shanghai Composite Index fluctuated between small gains and losses during morning trading and closed at 3,068.46 by the end of the trading day with a 0.7% gain. The smaller market in Shenzhen rose 2.3%.
China’s consumer price index, the CPI, rebounded by 0.7% in February and reached its highest level in 11 months, driven by a surge in consumption during the holiday season, according to data from China’s statistics bureau over the weekend.
Meanwhile, the producer price index, which measures the change in the selling prices received by domestic producers for their output, declined by 2.7% year-on-year, extending a downward trend that’s lasted for 17 consecutive months.
“Deflation remains a significant concern among investors regarding China’s economic landscape,” said Stephen Innes of SPI Asset Management.
He said that beyond increased government spending, it is evident that the economy requires structural reforms to encourage citizens to spend rather than save.
EV stocks advanced following data from China Association of Automobile Manufacturers, which said that the production and sales of EVs increased year-on-year by 28.2% and 29.4% in the first two months of 2024, with market share reaching 30%.
Hong Kong-listed electric-vehicle maker NIO added 4.1%, and BYD surged 4.7%.
Property shares were down after authorities signaled that struggling real estate developers may not receive significant bailouts, despite systemic risks from the ongoing debt crisis.
“Regarding severely insolvent and financially unsustainable real estate companies, bankruptcies should be handled according to legal procedures, and reorganizations should be carried out as required,” Housing and Urban-Rural Development Minister Ni Hong said at a press conference Saturday. “Any actions that harm the interests of the public will be vigorously investigated and those responsible will be held accountable in accordance with the law.”
China’s property sector accounts for nearly a third of the country’s economic activity, and the substantial decline in tax revenues from property sales is further burdening the financial system.
The Evergrande Group, a giant property developer, was wound up in January, and its former competitor Country Garden Holdings is now facing a liquidation petition in Hong Kong.
At the annual session of the National People’s Congress last week, Premier Li Qiang announced a 5% growth target, while acknowledging it will be a challenging goal in difficult times.
Critics expressed reservations about the sustainability of China’s economic recovery, saying that the country faces underlying challenges that require long-term solutions.
SPI’s Innes said that structural solutions would include establishing a robust social safety net, directing a higher share of income to labor, and improving retirement benefits.
“However, none of these changes are imminent in the near term,” he added.