SHANGHAI: China shares began the year of the Dragon in an upbeat mood on Monday as investors returning from the week-long Lunar New Year break snapped up tourism and entertainment stocks after buoyant holiday spending.
Traders were also inspired by last week’s robust performance in Hong Kong stocks and US-listed Chinese companies, as well as overseas advances in artificial intelligence (AI).
Some bet the government will roll out more measures soon to support China’s struggling economy and the market. China is expected to trim its benchmark mortgage reference rate at a monthly fixing on Tuesday, despite keeping a key policy rate unchanged on Sunday.
China’s blue-chip CSI300 Index rose 1.2% in its fourth consecutive session of gains. The Shanghai Composite Index climbed 1.6%.
But Hong Kong’s Hang Seng Index retreated 1.1% after a three-day rising streak, with the tech subindex plunging as much as 3.2%.
Yang Delong, chief economist at First Seafront Fund Management, said he expects the new chairman of China’s securities watchdog - who was appointed days ahead of the holiday break - to provide support to China’s capital markets through a series of reforms.
Tourism revenues in China during the Lunar New Year (LNY) holiday surged 47.3% from a year earlier, official data showed on Sunday. On the entertainment front, China’s box office revenue exceeded 8 billion yuan ($1.11 billion) during the eight-day break, marking a record high.
“These are strong numbers, partially reflecting the pent-up demand for family gathering during the first normal LNY since Covid,” Goldman Sachs economist Hui Shan said in a note. Travel-related stocks jumped. Jinjiang Hotel shares climbed 6.9% to a three-week high. Changbai Mountain Tourism gained 8%.
Shares of film-makers including Shanghai Film, Bona Film Group and Beijing Enlight Media also rose.
But the small-cap CSI500 Index lost 0.2%, while Chinese developers listed in Hong Kong fell, reflecting the market’s fragility as the sector undermines China’s economy. Goldman said that China’s “housing bottom is not in sight” yet.
Investors also chased shares of Chinese AI companies, with excitement fuelled by OpenAI’s new software, called Sora, that can generate minute-long videos based on text prompts.
News in the AI industry “supports our optimistic views” on demand for computing power, Guosheng Securities said in a report. The brokerage expects AI to remain a strong investment theme this year.
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