China, Hong Kong Stocks Show Little Movement Amid Holiday Anticipation

Equities in China and Hong Kong displayed minimal change on Wednesday, with many investors hesitant to initiate new positions ahead of the extended Labour Day holiday. Concurrently, data revealed a sharp decline in new export orders, attributed to stringent tariffs imposed by the United States.

Market Performance
  • China’s CSI300 Index of leading shares and the Shanghai Composite Index both experienced negligible movement by the midday break.
  • Hong Kong’s Hang Seng Index saw a rise of 0.2%, although it is on track for a 5% decrease in April, marking the most significant monthly drop in 16 months.
Economic Factors and Expert Opinions

China’s manufacturing sector activity contracted at its quickest rate in 16 months this April, influenced by the ongoing trade tensions between the US and China. However, these results have also heightened expectations for increased government stimulus measures.

Analyst Insights

Zheng Gang, a strategist at Yingda Securities, suggested that growing government stabilization initiatives and a greater inclination among listed firms to distribute dividends and repurchase shares are anticipated.

The brokerage advises focusing on high-dividend blue-chips, consumer stocks, and tech shares, anticipating gains from Beijing’s strategies to stimulate consumption and bolster domestic technologies.

Sector Highlights
  • Chinese artificial intelligence (AI) stocks and the technology-heavy STAR 50 Index increased following President Xi Jinping’s recent Shanghai visit, where he advocated for AI advancements.
  • Shares of Chinese ethane importers, including China Petroleum, Satellite Chemical, and Wanhua Chemical, increased after China reportedly removed the 125% tariff on US ethane imports imposed earlier in the month.
  • Conversely, banking shares experienced significant losses on Wednesday, after major Chinese lenders reported reduced margins in the first quarter, amidst a persistent economic slowdown and property sector challenges.
Upcoming Holiday Closures

The Chinese stock market will be closed from May 1 to May 5 for the Labour Day holiday, with trading resuming on Tuesday. Hong Kong’s stock market will be closed on Thursday and Monday for public holidays.