Next Week in China: 21-25 October 2024

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Major Data Releases:

21 October: China to report October 1-year and 5-year loan prime rates (LPR)
22 October: Hong Kong to report September consumer price index (CPI)
24 October: Taiwan to report September unemployment statistics
25 October: Macau to report September CPI
27 October: China to report profit of industrial enterprises above designated size for September

Next week is expected to be relatively quiet in terms of major economic data releases in China. However, as this period marks the beginning of financial reporting, attention should be given to companies’ third-quarter earnings reports.

Regarding the loan prime rate, we are maintaining a neutral stance regarding a potential reduction in October. While there is a likelihood for a future cut, adjustments to existing mortgage rates are currently robust. Several banks have announced that beginning 25 October, they will implement batch adjustments to interest rates of existing personal mortgage loans. These adjustments will exclude loans in regions such as Beijing, Shanghai, and Shenzhen, as well as second home mortgages. For other eligible mortgage loans, the interest rates will be adjusted to the prevailing LPR minus 30 basis points. Data show that these adjustments in current mortgage rates are expected to benefit 50 million households, equivalent to 150 million people. It is estimated that they will reduce household interest expenses by approximately RMB 150 billion (USD 21.1 billion) annually.

Chinese stocks maintained their week-on-week declines despite the announcement of fresh stimulus packages from the central government. As of Thursday, 17 October, the MSCI China Index had decreased by 6.54 per cent for the week, the Shanghai Composite Index had fallen by 1.50 per cent, the Shenzhen Component Index had decreased by 1.68 per cent, and the ChiNext Index had decreased by 3.21 per cent.

NWIC - 18Oct24 - Graph

Looking ahead, signs that the A-share market has already bottomed out have increasingly solidified, while long-awaited policy support measures have been confirmed. On 12 October, China’s Ministry of Finance announced a package of incremental policy interventions, which include supporting local debt resolution, supplementing bank capital, stabilizing the real estate market, and increasing support for key groups. The ministry also stated that the central government still has room to borrow more and raise the budget deficit. While specific policy details must still be approved by the Standing Committee of the National People’s Congress before taking effect, the positive stance is evident. Overall, it will take time for these new policies to lift the performance of the stock market, but market confidence is gradually recovering and risk appetite towards Mainland assets is increasing. These would be beneficial for the performance of Chinese equities.

What’s next for the Chinese stock market? Join us on Wednesday, 23 October 2024, at 3 pm CET (9 am EST/ 9 pm HKT) for a 30-minute webinar on the opportunities and risks ahead for Chinese stocks. Hear expert insights from Peter Lundgreen, founding CEO of Lundgreen’s Capital, and Theodore Qi Shou, CEO of Hong Kong-based Yiyi Capital, as China navigates its way out of a property market crisis, weak consumer demand, and the transition to lower interest rates. Click here to learn more.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.