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ASIA STOCKS: China Equities Edge Higher Following Positive Data

ASIA STOCKS
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The Chinese market is stabilizing after initial losses, with the CSI 300 index is 0.45% higher following a 0.5% drop earlier. Telecom and consumer discretionary stocks led declines, while consumer staples, materials & Tech stocks have shown resilience. China's economy met its 2024 growth target of 5% after a strong Q4, supported by a stimulus push and export strength ahead of potential U.S. tariffs. However, risks remain, as Donald Trump’s impending return to the White House raises fears of tariff hikes, which could significantly impact trade—a key growth driver.

  • Despite positive GDP data, challenges persist. Industrial production grew 6.2% in December, driven by export front-loading, but domestic demand remains weak, with retail sales underperforming at 3.7% growth and unemployment rising to 5.1%. The property sector continues to drag on the economy, with investment contracting 10.6% in 2024—its worst performance since records began. Efforts to stabilize the housing market have yielded marginal improvements in home prices, but concerns remain high, particularly as state-backed developer China Vanke faces mounting debt and falling investor confidence.
  • Although the property related data showed further contraction, prices fell at slower pace, China property indices are trading higher today, with the BBG China Property Index up 1.05%, although China Vanke is drag, trading 6.20% lower following headlines that the CEO has been detained by police. Other major benchmarks are higher with Mainland Property Index up 1.60%, while HS Property Index trades 1.65% higher.
  • The Hang Seng is so far holding onto gains made over the past week, trading 4.30% off Jan 13 lows, although still 2.76% lower in Jan.
  • Beijing’s fiscal policy is expected to take center stage in 2025, with measures to stimulate growth while navigating deflationary pressures and potential capital outflows. Analysts note that sustaining momentum will require balancing external risks and further domestic reforms.
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The Chinese market is stabilizing after initial losses, with the CSI 300 index is 0.45% higher following a 0.5% drop earlier. Telecom and consumer discretionary stocks led declines, while consumer staples, materials & Tech stocks have shown resilience. China's economy met its 2024 growth target of 5% after a strong Q4, supported by a stimulus push and export strength ahead of potential U.S. tariffs. However, risks remain, as Donald Trump’s impending return to the White House raises fears of tariff hikes, which could significantly impact trade—a key growth driver.

  • Despite positive GDP data, challenges persist. Industrial production grew 6.2% in December, driven by export front-loading, but domestic demand remains weak, with retail sales underperforming at 3.7% growth and unemployment rising to 5.1%. The property sector continues to drag on the economy, with investment contracting 10.6% in 2024—its worst performance since records began. Efforts to stabilize the housing market have yielded marginal improvements in home prices, but concerns remain high, particularly as state-backed developer China Vanke faces mounting debt and falling investor confidence.
  • Although the property related data showed further contraction, prices fell at slower pace, China property indices are trading higher today, with the BBG China Property Index up 1.05%, although China Vanke is drag, trading 6.20% lower following headlines that the CEO has been detained by police. Other major benchmarks are higher with Mainland Property Index up 1.60%, while HS Property Index trades 1.65% higher.
  • The Hang Seng is so far holding onto gains made over the past week, trading 4.30% off Jan 13 lows, although still 2.76% lower in Jan.
  • Beijing’s fiscal policy is expected to take center stage in 2025, with measures to stimulate growth while navigating deflationary pressures and potential capital outflows. Analysts note that sustaining momentum will require balancing external risks and further domestic reforms.