Chinese Stocks Slide as Investors Show Disappointment in Economic Policy Signals

Chinese market optimism waned on December 13th, as stocks retreated from a three-day advancing streak, largely influenced by the reception to the recent Central Economic Work Conference outcomes. Both mainland and Hong Kong stocks were observed to falter amidst investor dissatisfaction.

Market Retreat

In mainland China, the prominent CSI 300 Index succumbed to a 1.7% decrease, and the Shanghai Composite Index trailed with a 1.2% drop. The downward trend extended to Hong Kong's financial market, with the Hang Seng Index diminishing by 0.9% and the Hang Seng China Enterprises Index experiencing a 1.1% dip.

Focused on Risks, Overlooking Real Estate Stimulus

The annual Central Economic Work Conference, a bellwether for policy direction, concluded with emphases on risk management and boosting internal demand. Noteworthy is the lack of fresh stimulus measures for the real estate market, which has traditionally been a pillar of China's economic strength. This omission has notably left investors wanting, as reflected in the market movements.

Investor Sentiment and Analyst Perspectives

The broader Asian market maintained a reserved posture, awaiting decisive policy announcements from the U.S. Federal Reserve. Analysts pointed out that the Chinese leadership's conference readout tilted towards domestic demand, resonating with pre-established market anticipations but failing to offer tangible reassurance to the property sector. Esteemed financial institutions such as Goldman Sachs and Citigroup have respectively highlighted the absence of new property-related policies and anticipated continued softness in property sales for December.

Meanwhile, discussions around fiscal policy adjustments were hinted at post-conference, with recommendations to calibrate the fiscal deficit and special local government bonds for 2024.

Sectoral Declines and Notable Losses

Market sectors broadly suffered, spearheaded by significant losses in liquor and real estate shares. Sunac China, a key property developer, saw its stock plummet by 15% in a pronounced afternoon trading decline. Even high-profile tech companies listed in Hong Kong weren't insulated, with a collective 1.2% decline marking their performance.

stocks, economy, policy