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China stock traders look for boost from Xi Jinping-led Communist Party meeting as UBS, JPMorgan pick sweet spots
- Consumers to technology sectors could get a boost from China’s new economic blueprint at plenum in Beijing this week
- Policy details could provide support local stock market, HSBC Qianhai says, where foreign inflows have topped US$100 billion since March
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No one can blame traders for being upbeat about Chinese stocks just as volatility is set to grip global financial markets in the final sprint leading up to the US presidential election.
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More than 300 top cadres of the Communist Party of China are gathering in Beijing for the fifth Plenum of the 19th congress from Monday to Thursday. They are expected to endorse a new five-year blueprint that sets the nation’s agenda on social and economic development through 2025.
There is a feel-good factor about the meeting – traditionally held at Jingxi Hotel in Beijing and known as “China’s safest hotel” – because it is owned by the People’s Liberation Army.
No Chinese president has generated a bigger post-plenum impact than Xi Jinping since the Communist Party established the once-every-five-years key meeting in 1995. Stocks rose by 4.7 to 9.2 per cent a month after the plenum in 2015, compared with a range of losses and tiny gains in the preceding four gatherings since the Shanghai Stock Exchange’s inception in 1990.
Party leaders are expected to unveil key targets and action plans to solidify the post-Covid-19 recovery, and overcome the worst post-war recession and worsening US-China relations. Foreign funds have stepped up their bets, while analysts at UBS, JPMorgan and HSBC units pick their sweet spots.
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