Next Week in China: 23-27 December 2024

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Major Data Releases:

21-25 December: 13th meeting of the Standing Committee of China’s National People’s Congress
26 December: Macau to report 2023 gross national income
27 December: China to report November Profits of Industrial Enterprises above designated size
27 December: Hong Kong to report September payroll and wage statistics
27 December: Macau to report November External Merchandise Trade data

There are only a few macroeconomic data releases scheduled over the holiday season that begins next week. The Hong Kong market will be closed for Christmas on Wednesday, 25 December up to 26 December, with afternoon trading on 24 December also ending early.

The 14th NPC Standing Committee (NPCSC) will convene for its 13th session from 21-25 December. During this meeting, the committee will review draft bills, including amendments to the Representatives Law, the Value-Added Tax Law, and the Science and Technology Popularization Law. They will also consider the Law on Legal Publicity and Education. Additionally, draft measures submitted by the State Council such as the Private Economy Promotion Law, the Fisheries Law, and amendments to the Anti-Unfair Competition Law will be reviewed. These are expected to affect business sentiment towards specific sectors.

With respect to the profit of industrial enterprises above the designated size, we expect a slight improvement in November compared to October. Between January and October, profits for these enterprises decreased by 4.3 per cent year-on-year. In October alone, profits fell by 10 per cent year-on-year, although this marked a significant narrowing from the 27.1 per cent decline tallied in September.

Despite a modest improvement in both the producer price index and industrial production growth rates in November, challenges remain for the recovery of industrial profits. The elevated base effect, with average industrial profit growth rate in November-December 2023 in double digits, alongside the persistent pattern of high supply and weak demand, will again exert pressure on the profit growth. However, we note that profit growth in the high-tech manufacturing industry continues to outpace the overall pace across other industrial and manufacturing sectors, indicating an accelerated shift from old to new growth drivers.

For equities, major indices posted week-on-week declines. As of Thursday, 19 December, the MSCI China Index had decreased by 0.78 per cent. Meanwhile, the Shanghai Composite Index fell by 0.64 per cent, the Shenzhen Component Index decreased by 0.6 per cent, and the ChiNext Index declined by 0.97 per cent. In terms of market capitalization, large-cap stocks outperformed small and mid-cap stocks this week in contrast to the previous week’s performance. From a style perspective, value stocks were favoured over growth stocks during this period. Looking ahead, the stock market in Mainland China is expected to continue its rebound fuelled by positive policy expectations, stronger appetite for risk, and easing liquidity, although it may experience upward adjustments.

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.