Chinese shares will likely come under pressure upon their return from a week-long break, reflecting losses in the Hong Kong market and sluggish holiday spending.
Mainland markets reopen Thursday after being shut since Oct. 1 for the National Day holiday. A gauge of major Chinese firms listed in Hong Kong has fallen 1.7% during this period, leaving the onshore benchmark CSI 300 Index vulnerable to renewed selling after it fell below a key technical support level late last month.
Investors will have to contend with early data signaling entrenched pessimism among Chinese consumers, a government showing little appetite for potent stimulus, and lingering external uncertainties. While a recent patent license deal between Qualcomm Inc. and Huawei Technologies Co. has rekindled enthusiasm toward China’s technology sector, analysts say stronger economic data and earnings are needed to justify a more bullish stance.
“HSI is down for the period and seems like no positive news on the consumption front, so probably a lower open,” said Leonid Mironov, a portfolio manager at Gavekal Capital. “With the fifth plenum at the end of the month, potentially cautiousness will prevail until then,” he said, referring to a key Chinese Communist Party meeting slated for late October.
Hong Kong’s benchmark Hang Seng Index has fallen 2% since Sept. 30.