Next Week in China: 10-14 February 2025

Major Data Releases:

• 10 February: China to report January money supply growth rate
• 10 February: China to report January Total Social Financing (TSF)
• 10 February: China to report January New renminbi loans
• 11 February: Hong Kong to report business situation of small and medium-sized enterprises for January 2025
• 14 February: Macau to report Q4 2024 rental statistics

After the Lunar New Year holiday, China returns to its scheduled releases for money supply and financing statistics, which will occur next week.

Although the onshore market was closed from 28 January until 4 February, some significant developments occurred during this period. The domestic tourism market experienced a boom, with cross-regional travel reaching new highs. Additionally, the Spring Festival holiday set a global record for box office sales for films. Abroad, US President Donald Trump announced a 25 per cent tariff on Canadian and Mexican imports, along with an additional 10 per cent tax on Chinese goods. However, he later announced a 30-day delay for the tariffs on Canadian and Mexican goods. In other news, a private Chinese company launched a new artificial intelligence (AI) language model, DeepSeek, which has garnered international attention and shocked Wall Street.

Regarding corporate financing statistics, we anticipate that in January’s data, short-term corporate loans will rise compared to the previous month but is lower compared to lending volume a year ago. Medium and long-term corporate debts are expected to follow this pattern, increasing month-on-month but decreasing year-on-year. This trend is primarily due to ongoing efforts to prevent idle funds and manage debt restructuring. Additionally, January data from the Purchasing Managers’ Index for manufacturing indicates a decline in production lower than the levels seen last year. While the operating rate for January is stronger than the typical seasonal trend, it remains slightly below January 2024 levels. This is why we expect corporate loans of all tenors to increase month-on-month but decrease year-on-year.

As for residential financing, we expect short-term loans to residents will increase in January compared to the previous month but decrease on an annual basis. Similarly, medium- and long-term loans to residents are anticipated to rise month-on-month but decline year-on-year. On one hand, culture and tourism data during the Spring Festival exceeded seasonal expectations. On the other hand, a new round of state subsidies has bolstered major consumer goods like automobiles and home appliances, maintaining strong sales despite the Spring Festival to support growth in short-term individual loans. As for medium- and long-term loans, sales in the commercial housing market started to recover beginning the fourth quarter of 2024 significantly driven by first-tier cities, with an even stronger recovery in second-hand home sales. However, the impact on medium- and long-term loans to residents may be limited. Real estate sales were relatively sluggish during the holiday period, thus medium- and long-term loans to residents will increase month-on-month but decrease year-on-year.

Chinese equities are up from their pre-holiday closing prices. As of 6 February, the MSCI China Index rose by 3.5 per cent for the week. The Shanghai Composite Index increased by 0.62 per cent, the Shenzhen Component Index climbed by 2.34 per cent, and the ChiNext Index went up by 2.76 per cent. During this time, small and mid-cap stocks significantly outperformed large-cap stocks, while growth stocks slightly outpaced value stocks. Looking ahead, global uncertainties have materialized with Trump’s tariff announcement. While there are jitters about their long-term impact, the short-term effects of the additional import duties appear to be relatively manageable. The introduction of DeepSeek, along with growing market expectations for policies from the “Two Sessions” meeting in March and the anticipated improvement in funding conditions, are expected to gradually restore market risk appetite. Trading activity is likely to increase post-holidays, making structural opportunities particularly on AI-related shares worth watching.

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.