Chinese stocks dipped slightly after the Golden Week holidays, as traders came back to work. Tourism numbers didn’t meet expectations, and there’s a lot of uncertainty in the global market.
On Monday, the CSI 300 Index went down by about 1.3%, which was its first trading day in over a week. It did recover some of those losses later on. While China’s market was closed, there were significant events abroad. The global market was shaken by a selloff in US Treasuries, and oil prices surged due to unexpected attacks by Hamas on Israel over the weekend.
Tourism revenue during China’s Golden Week holiday was higher compared to the previous year, but it still didn’t reach the government’s predictions. Data from the manufacturing and services sectors released during the holiday break indicates that the overall economy is not bouncing back strongly, and the property market crisis is still a concern.
Chinese stocks are facing a few challenges, which are affecting them in a negative way,” explained Willer Chen, a senior research analyst at Forsyth Barr Asia Ltd.
Some traders were disappointed by the holiday spending numbers, and this had a negative impact on travel and leisure-related stocks. Airlines like Air China Ltd. and China Southern Airlines Co. saw their stock prices drop by over 2%, and UTour Group Co. experienced a significant drop of more than 8%.
In general, there’s a sense of pessimism surrounding the Chinese stock market. The CSI 300 Index has fallen by more than 5% this year, and it’s getting closer to wiping out all the gains it made during the reopening rally that began in October 2022.
The property market is still a big worry. Analysts at Goldman Sachs Group Inc. believe that although China may introduce more measures to ease housing concerns in the next few months, it’s likely that the real estate sector will experience a slow and gradual recovery in the coming years, kind of like the shape of the letter ‘L’.
Looking at past stock market performance after the Golden Week holidays, it’s been a bit unpredictable. Last year, the CSI benchmark dropped by 2.2% in the first trading session after the holiday, but in 2021, it went up by 1.3% upon its return.
Trading in Hong Kong was put on hold for the morning on Monday because of Typhoon Koinu.
Hao Hong, the chief economist at Grow Investment Group, expressed some uncertainty about the market’s direction given the complex external factors. He explained in a Bloomberg TV interview, “It’s a bit challenging to predict where the market will go right now. The external factors are quite complicated. There are both positive and negative aspects, so traders might find it a bit tough to make decisions about the overall market.”
