Understanding the stock markets is by all accounts an intricate matter. There are various things to consider, knowing when to buy, when to sell, etc. In the Greater China there are four main stock exchanges, the SSE (Shanghai Stock Exchange), SZSE (Shenzhen Stock Exchange), the BSE (Beijing Stock Exchange) as well as the HKEX (Hong Kong Stock Exchange. Each one has specific characteristics which play a different role within China’s capital markets.
Breaking down the market one element at a time
The Shenzhen as well as Shangai exchanges tend to dominate in terms of the market capitalization. It caters primarily for domestic investors. The Hong Kong exchange on the other hand serves as an important international gateway. The Beijing Stock Exchanges is smaller and newly established. It provides support for the SMEs and innovation-driven enterprises in China.
Chinese and Hong Kong stocks gained on Monday, recovering from last week’s sharp declines, as defense and tech stocks led gains. At market close, the Shanghai Composite index. SSEC was up 0.7% at 3,583.31 points, recovering from losses in earlier trades. The blue-chip CSI300 index. CSI300 jumped 0.4%. The defense sector. CSI399959 led the onshore market higher with a 2.9% gain. The semiconductor sector. CSI931865 gained 1% and AI-related stocks <. CSI930713> added 0.9%.
A bit of a recovery on stocks for Hong Kong
The rebound on Monday came after markets last week booked their steepest losses since April. The bullish trend for Chinese equities has started to show signs of slowing as the much-anticipated Politburo meeting and tariff negotiations with the U.S. both failed to deliver positive surprises. “Market sentiment is becoming more volatile as positive catalysts are losing momentum,” Citic Securities said in a note, adding that investors might shift focus to defensive sectors for shelter or industries with clear growth trajectories.
In Hong Kong, the benchmark Hang Seng Index. HSI was up 0.9% at 24,733.45, also recovering from last week’s loss. The HSI itself is a market-capitalization-weighted index. It tracks the performance of some of the largest and also most liquid companies that are listed on the HKEx (Hong Kong Stock Exchange). The HSI is overall considered as a benchmark equity market index for Hong Kong. It also often serves more generally as a barometer for the Asian markets.
What is the overall outlook for China?
The tech sector. HSTECH jumped 1.6% and AI-related shares. HSAIT added 1.7%, leading markets higher. Domestic ship stocks continued to rally on Monday after Beijing raised concerns over potential security risks in Nvidia’s H20 chip. Looking ahead, markets are awaiting new developments on the trade truce between China and the U.S. that expires on August 12. U.S. Treasury Secretary Scott Bessent said Washington has the makings of a deal and was “optimistic” about the path forward.
“Given rising uncertainties in the foreign market, especially in the U.S. where Trump’s intervention in economic reporting undermines the efficacy of policies, both on- and off-shore Chinese markets will likely be under pressure in the near term,” Hong Hao, chief investment officer at Lotus Asset Management, said in a note.
The current trade truce between the US and China have provided ha temporary lift for overall market sentiment. The geopolitical tensions between the two have seemingly eased up for a bit due to the recent agreement to roll back the tariffs for a 90-day period. This tariff rollback has somewhat reduced the urgency for any additional Chinese stimulus. This allows policymakers some flexibility as they asses the overall economic conditions. Apart from these matters, the undemanding valuations, low institutional positional and first quarter results all lend a constructive outlook onto the Chinese equities. Considering all these matters as well as the ever-changing financial landscape of China, it would be interesting to see how everything evolves.
GCN.com/Reuters.