“The market might see the range-bound performance in June, but we are not pessimistic, the darkest hour has passed.” China’s cabinet announced a package of 33 measures covering fiscal, financial, investment, and industrial policies on Tuesday to revive its pandemic-ravaged economy. Shanghai sprung back to life after the financial hub lifted most anti-COVID curbs, but worries over a rebound of cases and the zero-COVID policy lingered.
New-energy shares rose 2.4%, semiconductors jumped 4.1%, while real estate developers lost 1.6%, and energy stocks dropped 2.4%. China’s electric vehicle startups reported stronger sales for May and forecast continued gains for June as supply chains and output begin to recover from the disruption of COVID-19 lockdowns.
Geopolitics-wise, China “firmly” opposes the launch of the U.S.-Taiwan Initiative on 21st Century Trade, the commerce ministry said on Thursday, adding the Chinese government opposed any form of official contact between Taiwan and other countries. Tech giants listed in Hong Kong declined 0.8%, with e-commerce giant Alibaba down 2.4%. Mainland developers trading in Hong Kong retreated 2.3%.
China’s cabinet said on Wednesday it would increase the credit quota for policy banks by 800 billion yuan ($120 billion) for them to support infrastructure construction. “With frequent measures introduced to support the economy, A-shares recorded their biggest rebound in May since the correction,” said Chen Mengjie, chief strategist at Yuekai Securities, after the Shanghai Composite Index jumped 4.6% in May, the biggest monthly rise in a year.
“Due to still-elevated COVID-related uncertainty, we see big downside risks to our current annual GDP growth forecast of 3.9% for 2022,” said Nomura in a note. China will aim to ensure its grids source about one-third of power from renewable sources by 2025, up from 28.8% in 2020, the state planning agency said on Wednesday in a new “five-year plan” for the renewable sector.