Chinese stocks trimmed an early loss as traders weighed upbeat holiday travel data against a contraction in factory output.
(Bloomberg) — Chinese stocks trimmed an early loss as traders weighed upbeat holiday travel data against a contraction in factory output.
The CSI 300 Index slipped 0.1% after falling as much as 0.7% as onshore markets reopened after the Golden Week holiday. Shares linked to the travel and energy sectors led declines.
Upbeat holiday travel figures are doing little to shore up Chinese equities, after the reopening rally faltered amid growth jitters and geopolitical risks. An unexpected contraction in the manufacturing sector is reinforcing concerns about an uneven recovery after the nation emerged from years of strict Covid curbs.
“The contraction in April manufacturing activity is worrying while the holiday travel boom has been expected and priced in already in the past few weeks,” said Dickie Wong, director of research at Kingston Securities Ltd. “So the pullback with the onshore market today is not surprising.”
Travel and movie-related stocks came under selling pressure on Thursday. Domestic tourism spending during the holiday lagged a recovery in traffic, with per capita expenditure still 10% below the pre-pandemic level in 2019, Citigroup Inc. said in a note.
Official data showed travel activities in China surged over the Labor Day holidays, with the number of domestic trips reaching 274 million to surpass 2019 levels although the rebound in tourism spending was much more subdued.
China Tourism Group Duty Free Corp., a bellwether for the industry, slid as much as 4.8% in onshore trading. China Southern Airlines Co., the nation’s largest carrier, tumbled 5.2% while Bona Film Group Co. dropped 3.9%.
Traders are searching for the next catalyst for Chinese equities as the buzz surrounding the consumption recovery and a key political gathering fades. Companies have reported a mixed bag of results of late, reinforcing the concerns of skeptics who are still waiting on clearer evidence of an economic rebound.
Cautious Start Awaits China Stock Traders Returning From Holiday
Of particular concern is the weakness in the manufacturing sector, with a private survey released Thursday indicating that factory activity struggled in April.
Against this backdrop, the benchmark CSI 300 Index has fallen for three straight weeks, the longest run since February. Foreign investors sold a net 1.2 billion yuan ($174 million) worth of Chinese shares via the stock connect as of mid-day on Thursday.
Insurance and banking stocks fared better. Ping An Insurance Group Co. of China Ltd. gained more than 3% after the firm reported a jump in earnings while financial firms listed in Hong Kong got a boost from an interest-rate hike.
Volatile Trade
“The market will remain choppy in the coming days,” said Redmond Wong, market strategist at Saxo Capital Markets. “We are positive toward Chinese stocks for the rest of the second quarter but also caution investors about the potential volatility in the global market.”
In Hong Kong, the Hang Seng Index rose 1% while a gauge tracking Chinese companies climbed 1.6% to halt a two-day drop. Onshore investors bought a net HK$1.3 billion ($166 million) worth of Hong Kong shares via the stock connect on Thursday.
–With assistance from John Cheng.
(Updates throughout)
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