The Chinese stock markets, including the Hang Seng and CSI 300 indices, experienced a significant rebound on Friday due to positive economic data.
The Hang Seng index surged by over 3%, while the CSI 300 and Shenzen 50 also saw similar gains. This market performance coincided with an increase in copper prices, indicating a broader recovery in industrial metals.
The Chinese economy reported a year-on-year growth of 4.6% for the third quarter of 2024, slightly above expectations and a decrease from the previous quarter. However, the growth rate remains the weakest since the first quarter of 2023, highlighting challenges in the real estate sector and domestic consumption.
The rebound in the markets was supported by the People's Bank of China (PBoC), which announced a lending mechanism to finance corporate buybacks. This initiative aims to boost investor confidence and stabilize the market.
From a technical perspective, the Hang Seng index is attempting to rebound from the 20,000-point threshold and has shown signs of resilience. The risk/reward ratio now favors buyers, suggesting potential upward momentum.
The future of the Chinese equity market depends on upcoming economic indicators, particularly retail sales data, and the ability of the Chinese government to implement effective policies. Investor sentiment remains cautiously optimistic, and the recent measures taken by the PBoC are seen as proactive steps to stabilize the market.