Alibaba and other Hong Kong-listed stocks saw a decline on Monday as mainland Chinese markets reopened following the Lunar New Year holiday period. Despite some positive signs for the world’s second-largest economy, investors seemed disappointed.
In Monday trading, Alibaba’s Hong Kong-listed shares slipped by 2.1%, while the wider Hang Seng Index lost 1.1%. Although Hong Kong markets had reopened in the middle of last week after the Lunar New Year closure, Monday marked the first day back for mainland China. The Shanghai Composite gained 1.6% on this day, but even this positive performance in Shanghai received a muted reaction from investors.
Chief Investment Officer at UBS Global Wealth Management, Mark Haefele, noted that “Chinese onshore stocks saw only modest gains on Monday morning after the market reopened from a week-long celebration of the Lunar New Year … despite positive travel and spending data showing strength in consumption during the holiday period.”
Hope for Economic Relief in the Year of the Dragon
China’s economy has experienced a slowdown over the past year due to deflationary pressures and stresses from the indebted property sector. Despite facing structural issues, there are hopes that the Year of the Dragon might bring some relief to the Chinese economy.
Investors have been evaluating data from the holiday period, with tourism revenue surpassing 2019 levels. However, this indicator was not sufficient to sustain recent gains in Hong Kong stocks or enable Shanghai to catch up completely with global markets that have seen growth since the Lunar New Year closure.
Haefele mentioned that “Investors continue to look for further evidence of policy support … as government messages and measures thus far have failed to excite markets in a sustained way. We see a step-up in policy support this year in our base case.”