Chinese Stocks Bounce Back with First Annual Gain in Four Years
After a tumultuous three-year decline, Chinese stocks have finally turned the corner, posting their first annual gain in 2024. Despite a slight dip on the final trading day of the year, Hong Kong shares ended on a high note, buoyed by optimism over policy support.
CSI 300 Sees 14.7% Rise, Breaking Losing Streak
The blue-chip CSI 300, which tracks the largest companies listed in Shanghai and Shenzhen, rose an impressive 14.7% this year, shattering its losing streak since 2021. The Shanghai Composite Index also gained 12.8% in 2024, ending a two-year decline.
Hong Kong’s Hang Seng Index Closes with 17.7% Annual Gain
Hong Kong’s benchmark Hang Seng Index closed the year’s final session up 0.1%, marking an annual gain of 17.7% and ending four consecutive years of losses. Analysts at Value Partners noted that China’s performance came as a positive surprise to many investors, citing various supportive measures announced during the second half of the year.
Supportive Measures Pay Off
Chinese authorities have implemented bold measures since September, including interest rate cuts, home purchase incentives, and funding schemes for stock buying, to bolster the struggling economy and restore domestic confidence. These measures have largely surpassed expectations and overshadowed ongoing economic concerns, according to analysts.
Banking and Chip Sectors Lead the Charge
Banking stocks led the onshore market gains this year, with an advance of 34.7%, as the four largest state banks reached multi-year highs. The chip sector surged 53.9% as domestic investors boosted holdings in local semiconductor makers amid tightening U.S. chip restrictions.
Caution Ahead of 2025
While the market is expected to continue its upward trend, analysts warn of potential disruptions ahead. Dai Qing, a strategist at Changjiang Securities, notes that the market is in the final phase of “policy expectation-driven” trading, following Chinese leaders’ key meetings this month. Looking ahead to 2025, dividend-paying stocks could still outperform the broader market in the short term, especially with U.S. President-elect Donald Trump’s January inauguration potentially bringing market disruptions.
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