The Shanghai Composite index is looking for a boost from the latest manufacturing data.
China 50 – Daily Chart
The China 50 index has been trading in a range since October after the stimulus-led rally led to selling. The range is now in place between 12,931 and 14,539 for the index.
The National Bureau of Statistics will release manufacturing figures at 9:30am. The index is expected to come in at 50.3, which is just above the expansionary 50 level. A stronger number could give stocks a year-end boost.
Stimulus policies implemented by the Chinese government since September have shown the government’s commitment to promote stability and global economic growth. There have been some positive signs from the Central Economic Work Conference (CEWC) earlier this month, showing momentum and resilience in the domestic economy.
The policies, which included tax reductions, large-scale equipment upgrades and trade-in programs for consumer goods, have created positive momentum. The Ministry of Commerce said in December that sales revenue of consumer goods under the trade-in program, in which old consumer items are exchanged for upgraded ones, surpassed one trillion RMB. Passenger vehicle sales under the trade-in program alone was more than five million units.
Foreign banks are growing bullish on the Chinese market. Desmond Kuang, CIO for China at HSBC Global Private Banking and Wealth, said the policies have boosted manufacturers’ morale as both supply and demand recovered.
China’s resilience is also tied to its outstanding supply chain advantage, ensuring the country keeps a dominant position in the global industrial chain. The stock market has cooled from a steep rally into October but overseas investors may see an opportunity to grab stocks at cheap valuations compared to the US.
