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Officials are set to detail plans on Monday to revive local consumption by boosting people's incomes in China.
Chinese stocks listed on American bourses, including Alibaba Group Holding Ltd (BABA) and Baidu, Inc (BIDU), will be in focus on Monday, ahead of Beijing's announcement of key initiatives to boost the local economy.
Officials are set to detail plans to revive local consumption by boosting people's incomes in China, according to Bloomberg News, quoting Xinhua News Agency.
A press conference is scheduled for 3 pm local time (3 am ET).
On Sunday, China released a "special action plan" featuring measures such as increasing urban and rural incomes, establishing a childcare subsidy scheme, and stabilizing the stock market. However, it provided few details on how the plans would be implemented.
Reviving consumption has been a challenge for Beijing since the COVID-19 pandemic. Retail sales have been lackluster, and the property market is in disarray.
The plan is even more crucial as new tariffs from Donald Trump threaten to slow down Chinese exports, which contributed to nearly a third of the country’s economic expansion in 2024, according to Bloomberg News.
Investors could see swings in popular Chinese stocks such as JD.com Inc (JD), NetEase.com, Inc. (NTES), Pinduoduo Inc. (PDD), Tencent Music Entertainment Group (TME), and Yum China Holdings Inc (YUMC).
Moves in electric vehicle companies like Li Auto Inc (LI), XPeng Inc (XPEV), and NIO Inc (NIO) will also be closely watched.
Top Chinese stocks have done well this year, thanks to several fiscal initiatives from Beijing, attractive valuations, and expectations of an economic rebound.
Alibaba has been on a tear after a strong quarter and the recent pace of artificial intelligence development at the company.
Upbeat earnings from other tech firms and EV players have also supported the equity rally.
On Stocktwits, retail sentiment for Chinese tech stocks is broadly 'bearish' to 'neutral', and ‘bullish’ for some EV stocks. Comments are mixed.
One user noted that the recent gains in Chinese stocks and the simultaneous fall in American equities caused hedge funds in the U.S. to close their short positions in Asia, adding that the trend will continue.
“Money to be made in 2025+ is outside the U.S.,” said another user, highlighting the potential in international markets. They noted that even if the KraneShares CSI China Internet ETF were to nearly double from current levels, it would still represent only a 38% retracement from “the demolition” of its all-time high in February 2021.
Users also noted, based on technical charts, that Nio and Baidu are set up for breakout moves.
KraneShares CSI China Internet ETF (KWEB), which tracks Chinese tech companies, is up 16.7% year to date. iShares China Large-Cap ETF (FXI) and iShares MSCI China ETF (MCHI), which track firms across sectors, are up 29% and 22.4%, respectively.
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