Asian stocks were mostly lower on Tuesday despite a better-than-expected Chinese growth figure. However, the losses were contained as traders remain hopeful for the year ahead.
HK – Weekly Chart
The Hong Kong HIS index slipped less than 1%, and the index has a more prominent resistance level ahead at 22,500. Likely, the index heads are there to test the appetite for short positions.
We said yesterday the Chinese GDP indicator “could set up for a positive surprise as the figures are expected to show damage from the Zero Covid strategy of lockdowns.”
That proved to be the case as the GDP figures for Q4 came in at 2.8% and blew away expectations for 1.6%. The 3% annual expansion was the slowest in four decades, excluding 2020, as widespread lockdowns hit business activity. However, that figure also beat expectations of 2.7% for the year.
The latest figures will lead to renewed optimism that the reopening that started last month can be the start of a strong rebound that can support the economy in 2023.
“Looking forward, we expect to see a sustained economic recovery in 2023 due to reopening and policy stimulus,” said Chaoping Zhu of JP Morgan Asset Management.
“Service sectors should be the early beneficiary when pent-up demand is released.”
Consumer spending has been hit due to decreased mobility, and that can see a recovery in the first quarter.
JP Morgan analysts were still cautious, saying: “This deceleration shows the pressure of uncertainties associated with Covid. On the other hand, risks persist in the property sector and local government debt. Accommodative policies should also remain in place to support business confidence.”
The trend is still supported to the upside as global central banks slow the pace of interest rate hikes. The Chinese government and the Japanese will continue to support the economy with stimulus measures if there are any problems.
