China stock market saw a slight uptick on Thursday, with investors navigating thin trading volumes as the year draws to a close. The Hong Kong market remained closed for a local holiday but is set to resume trading on Friday.
The blue-chip CSI300 Index rose 0.05%, while the Shanghai Composite Index climbed 0.14%. Small-cap stocks outperformed, with the CSI 2000 Index gaining 3.1%, driven by a surge in AI-related themes.
Low Trading Volumes Continue
Trading activity has slowed since October, following a wave of optimism spurred by stimulus measures. Analysts say the market will likely remain directionless until March next year, as investors await further policy announcements.
During the current policy lull, retail investors in China are engaging in speculative trading of small-cap concept stocks. These stocks offer quick gains but come with significant risks.
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Key Policy Updates Expected in March
China’s annual parliamentary session, the National People’s Congress (NPC), will begin in early March. The session is expected to provide clarity on the country’s growth targets and strategies to address the sluggish economy.
Consumer discretionary shares rose 0.9%, while real estate stocks dropped by 0.8%. AI-related stocks drove much of the positive momentum, reflecting investor interest in innovative sectors.
China’s box office revenues for Christmas Eve hit a 13-year low, according to ticketing platform Maoyan. The decline highlights weak consumer spending, adding to concerns about the economy’s overall health.
Cautious Optimism for 2024
Investors are optimistic about future policy measures but remain cautious in the short term. The market’s direction will hinge on the government’s next steps to stimulate growth and restore confidence.
China’s markets are expected to stay subdued until clear policy signals emerge in March. For now, small-cap stocks and AI-related themes are keeping investors engaged amid an otherwise quiet trading period.
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