Chinese stocks declined in the first trading session of 2024 after weak manufacturing and home sales data reinforced concerns about the economic outlook.
The CSI 300 Index fell as much as 1.1% to halt a three-day gain and was headed for its worst first trading day of the year since 2019. The Hang Seng China Enterprises Index slid 2% and both indexes were among the region’s worst performers. Markets in Hong Kong and the mainland were shut on Monday for the new year holiday.
Sentiment took a hit after reports on Sunday showed China’s factory activity shrank in December to the lowest level in six months and a slide in home sales accelerated. The weak data may fuel expectations for more stimulus from authorities after leaders vowed to maintain a pro-growth stance in 2024.
“The performance of PMI continued to be weak and the wait-and-see sentiment toward the introduction of mid- to long-term deepening reform policies has intensified,” said Shen Meng, a director with Beijing-based Chanson & Co. “Therefore, there is still more uncertainty as to whether the momentum at the end of last year can be sustained.”
Chinese stocks had gained in the last few trading sessions of 2023, helped by year-end position adjustments and a jump in foreign buying. But the CSI 300 Index still ended 2023 with an unprecedented third year of losses after annual foreign purchases of the nation’s equities shrank to the least on record.
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Global funds had withdrawn 4.6 billion yuan ($852.3 million) from onshore equities as of 2.21pm local time on Tuesday.
But some including Matthews Asia see the weakness as a buying opportunity. Almost a third of 417 respondents in Bloomberg’s latest Markets Live Pulse survey say they will increase their China investments over the next 12 months, compared with just 19% in a similar August poll.
“China is a market that is out of favour so that enables us to buy stocks relatively cheap,” said Vivek Tanneeru, a portfolio manager for Matthews Asia in San Francisco. Tanneeru has overweight positions in Chinese stocks in the two emerging markets portfolios he oversees.
