Dive into the Editor’s Digest, available at no cost
Roula Khalaf, esteemed Editor of the Financial Times, curates her top stories in this engaging weekly newsletter.
On Friday, Chinese stocks saw a significant rise after Beijing pledged fresh initiatives to support consumers, going against the grain of a Wall Street downturn and propelling the country’s major stock index into the green for the year.
The encouraging news came late Thursday when Chinese regulators announced an upcoming press conference focused on “boosting consumption,” scheduled for Monday. This announcement lifted the CSI 300 benchmark by 2.4%, while the Hang Seng index in Hong Kong benefited with a 2.2% increase.
Currently, the CSI 300 is showing a modest gain of 1.8% for the year, whereas the Hang Seng has surged 19.4% since January. Meanwhile, Wall Street’s S&P 500 has seen a drop of 6.1%.
The rise was primarily seen in companies heavily tied to China’s vast consumer market. Kweichow Moutai, a prominent drinks manufacturer, saw its shares ascend by 5.9%. BYD, known for its electric vehicles, experienced a 6.1% boost, while CATL, the leader in EV battery production, rose by 3.5%.
Jason Lui, who heads the Asia-Pacific equities and derivatives strategy at BNP Paribas, remarked, “There’s palpable excitement among investors about the advancements in AI within China. However, until now, support for consumer spending has been lacking. [This latest announcement] appears to be addressing that gap.”
In recent times, China’s economy has entered a slower growth phase, with consumer spending softening, as evidenced by consistently low inflation numbers. Many economists have advocated for increased governmental intervention to bolster consumer activity.
Lui pointed out that clarity from the central government regarding its role in nurturing domestic consumption would benefit investors, especially since local governments in China are constrained by limited fiscal options to sustain consumer spending.
The press conference slated for Monday will feature representatives from the central bank, finance ministry, commerce ministry, and the National Development and Reform Commission, which is China’s primary economic planning body.
Additionally, on Friday, stocks in the childcare sector saw a spike after Hohhot, the capital of Inner Mongolia, announced cash incentives for new parents. These subsidies will grow with family size, starting from Rmb10,000 ($1,400) for the first child to an annual Rmb10,000 for ten years for the third child.
This announcement came on the heels of last week’s meetings of China’s parliament and chief advisory body, referred to as the “two sessions.” During these sessions, goals to boost birth rates were highlighted, alongside a 2025 growth target of “around 5%.” It’s worth noting that China’s population has been decreasing for three consecutive years.
Feihe, a Hong Kong-listed infant formula company, experienced a remarkable 15.7% jump in its stock value on Friday. Meanwhile, Beingmate and Aiyingshi, both listed domestically, reached the 10% ceiling, and Yili, a dairy company based in Hohhot, surged by 8.6%.
In the United States, equity markets fell into correction territory on Thursday after tariff threats from President Donald Trump raised the specter of a broader global trade dispute.
The dollar made minor gains, rising 0.2% against a selection of currencies on Friday, while the Japanese yen dropped 0.6% to ¥148.66 against the dollar.
Gold prices remained steady, and Brent crude, a global oil benchmark, saw a price increase of 0.9%, reaching $70.47 per barrel.
Wang Xueqiao in Shanghai contributed to this report.
