The CSI 300 Index jumped as much as 2.6% to its highest level this year. Officials from the finance ministry, commerce ministry, the central bank and other government bodies plan to hold a press conference Monday on measures to boost consumption. A gauge of Chinese stocks listed in Hong Kong climbed more than 3% intraday.
“The press conference on boosting consumption fanned expectations on policy support,” said Shen Meng, a director at Beijing-based investment bank Chanson & Co. “But if it falls short of providing details on increasing income, such optimism may weaken to some extent.”
Friday’s gains in China’s stock market reflect signs of renewed optimism over policy stimulus after the government set an ambitious economic growth target of about 5% for this year at this month’s annual gathering of the National People’s Congress. In an early sign that this year’s tech-driven rally in Chinese stocks may be broadening out, all 10 of the CSI 300’s sector gauges rose on Friday.
A sub-gauge of consumer staples surged more than 5%, its biggest gain since Nov. 7. Liquor maker Kweichow Moutai Co. and Wuliangye Yibin jumped by more than 5% each. Separately, stocks related to child birth such as Beingmate Co. and Shanghai Aiyingshi Co. surged by the 10% daily limit after local governments rolled out a childcare subsidy.
Sentiment toward the sector has improved following the NPC, where top leaders made boosting consumption a top priority for the first time since President Xi Jinping came to power over a decade ago. While details on the plan remain scarce, some analysts have recommended investors buy consumer stocks.
Investors are also hoping that a slew of January and February economic data due to be released at 10 a.m. local time on Monday will offer positive cues. China’s retail sales likely picked up and investment stayed steady from last year’s full-year figures, according to forecasts by economists in a Bloomberg survey.
The consumption boost is positive for the sector’s stocks but it remains to be seen whether they can hold on to the gains, said Jeremy Yeo, an analyst at SMBC Nikko Securities in Tokyo. It will be “interesting” if Chinese authorities come in with more support in the case of a market pullback, and establish the idea of a “Xi put” among investors, he added.
