China's index represented by CH50cash surged to its highest level this year, jumping as much as 2.6% on Friday in its strongest rally in two months. Consumer shares led the broad-based gains as investors anticipate significant policy support following the announcement of a high-level press conference on consumption measures scheduled for Monday.
Consumer Stocks Lead Market Surge
The consumer staples sub-gauge recorded its largest single-day gain since November, soaring more than 5%. Prominent liquor makers Kweichow Moutai and Wuliangye Yibin both climbed over 5%, while childcare-related stocks including Beingmate and Shanghai Aiyingshi hit their 10% daily limit after local governments introduced childcare subsidies.
CSI 300 Consumer Staples Index. Source: Bloomberg L.P.
Government Signals Stronger Support
Officials from multiple ministries—including finance, commerce, and the central bank—will detail consumption-boosting measures at Monday's press conference. China's financial regulator has already pledged to develop consumer finance initiatives, encouraging banks to accelerate personal loan issuance and increase financing for service industries including retail, tourism, and healthcare.
Broader Market Expansion
In a sign that this year's tech-driven rally may be broadening, all ten sector gauges within the CSI 300 rose on Friday. Banking stocks advanced as investors positioned for a possible reduction in reserve requirements that would free up more lending capacity. Chinese stocks listed in Hong Kong also climbed more than 3% intraday.
Analyst Perspective
"The press conference on boosting consumption fanned expectations on policy support," noted Shen Meng, director at Chanson & Co. However, he cautioned that "if it falls short of providing details on increasing income, such optimism may weaken."
Investors are awaiting January and February economic data release on Monday, with economists forecasting improved retail sales figures. The consumption focus represents a significant shift, as boosting consumer spending has become a top priority for President Xi's administration for the first time in his decade-long leadership.
CH50cash (D1 Interval)
CH50cash is approaching a key resistance zone that has triggered reversals since last September. Bulls need a close above the 38.2% Fibonacci retracement level to invalidate this resistance. Bears, on the other hand, will aim for a retest of the 61.8% Fibonacci retracement level. The RSI is in bullish divergence and nearing the overbought zone, while the MACD is widening after a bullish crossover. Source: xStation
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