Chinese Equities: The month of September in review

Highlights in this article reveal:  

• Signs of recent stimulus measures taking effect are beginning to emerge.
• Foreign investors continued to sell out of the Chinese market while domestic investors recorded positive inflows from ETFs purchases.
• Top officials will decide on their 2024 economic priorities at the December annual Central Economic Work Conference.

Chinese equities posted modest losses due to the rise in U.S. treasury yields and the strength of the dollar, which exerted pressure on emerging market assets. Foreign investors continued to sell out of the Chinese market, while domestic investors recorded positive inflows from their ETFs purchases. As a result, the MSCI China and MSCI China A Onshore indices were down 2.7% and 1.8% respectively.

Information Technology and Real Estate were the worst performers, recording the largest declines, while Energy and Financials performed relatively well.

China’s economy grew faster than expected at 4.9% year-on-year in the third quarter. September consumption and industrial activity surprised on the upside suggesting that recent stimulus measures are beginning to take effect. 

China’s economy grew faster than expected at 4.9% year-on-year in the third quarter. September consumption and industrial activity surprised on the upside suggesting that recent stimulus measures are beginning to take effect. Beijing has also stepped-up efforts to address the issue of local government debt, increasing the budget deficit by issuing 1 trillion yuan of sovereign bonds.  

Despite a brief uptick in new home sales, housing demand remains weak. The market will look for more clues at the annual Central Economic Work Conference in December, where top officials will decide their economic priorities for 2024. 

Additionally, a debt swap program was launched to reduce the interest burden on local governments. Despite a brief uptick in new home sales, housing demand remains weak. The market will look for more clues at the annual Central Economic Work Conference in December, where top officials will decide their economic priorities for 2024.  

On the geopolitical front, there have been marginal improvements in US-China relations following several rounds of high-level discussions and visits. It is anticipated that Joe Biden and Xi Jinping will meet at the November Asia-Pacific Economic Cooperation (APEC) summit in San Francisco. 

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