Chinese stocks may be able to expect positive days ahead as local markets re-open again. There has been a positive development over the holiday and that has been that travel activity has been increasing. This offers extra evidence that China’s economy is moving past the pandemic and starting to gather pace.

According to Bloomberg, there were around 425 million people who travelled internally with China through the first 4 days of the break that started on October 01. That makes it to be around 80% of last year’s numbers, so the volume of travel is heading back to normal levels. There may very well still be lower spending as many consumers tighten belts, but increasing local travel is a positive sign for consumer resilience. Recent retail sales data has been good with September’s retail sales data for China showing a +0.5% gain over an expected reading of 0.0%. Further increases in travel underline the gaining consumer strength.

Remember, that China’s economy is not driven by US-China trade, but by domestic consumption. A rough rule of thumb is that about 60% of China’s GDP comes from their consumer. This consumer drive aspect of China’s economy could also be a new direction for China to really double down into. The Communist Party’s Plenum is due later this month and the recent US/China trade war may encourage China to move towards greater consumer-driven growth. The leaders are gathering for a fresh 5-year plan. If this happens the Yuan will get a boost and it will also benefit equities in a number of Asian economies that are heavily reliant on China.

The recent movement in people is saying that the Chinese consumer may be heading back to business as usual. This should support dip buyers on the Hang Seng unless we see a rapid change in the global environment.


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