China stocks: all eyes on NPC meeting for policy moves to support rally sparked by state buying
- Traders will closely monitor the GDP target and government deficit as these will show whether the government is really serious about prioritising growth, fund manager says
- Investors are hoping the government implements more measures to complement its recent market-boosting efforts
Traders are eagerly awaiting China’s annual legislative meeting for clues about whether the recent market rebound will sustain, as the high-stakes political gathering sets the nation’s economic agenda for the year.
The National People’s Congress (NPC), which kicks off on Tuesday in Beijing and brings together more than 2,000 lawmakers from across the country, will be crucial for investors betting on fresh policies to buttress the ongoing stock market rally.
Key topics to watch include policymakers’ resolve to tackle the property market’s woes, financing and fiscal reforms at the local government level and demand-side stimulus measures to boost consumption, according to Goldman Sachs.
“The GDP [gross domestic product] target and the government deficit ratio will be closely monitored by the market,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “The two macro figures will set the stage for aggregate demand in China this year at such a policy-sensitive time and show investors if the government really prioritises economic growth.”
The CSI 300 Index has risen 11 per cent since hitting a five-year low last month after Beijing replaced the head of the stock-market regulator, increased direct state buying through the sovereign wealth fund and cracked down on quantitative trading by hedge funds.
