SHANGHAI: Chinese stocks steadied on Tuesday while the Hong Kong market tumbled, after Beijing set a widely-expected 5% growth target for 2024 at a key parliament meeting that missed some investors’ expectations for stimulus measures.
The blue-chip CSI 300 Index rose 0.7%, while Hong Kong’s benchmark Hang Seng lost 2.6% by market close.
China will target economic growth of about 5% this year as it works to transform its development model, curb industrial overcapacity, defuse property sector risks and cut wasteful spending by local governments, Premier Li Qiang said.
Li was delivering his maiden work report at the annual meeting of the National People’s Congress (NPC), China’s rubber-stamp legislature.
“The 5% GDP growth target was in line with expectations,” said Lynn Song, ING’s chief China economist.
While the target is similar to last year, analysts say the government will need to deliver stronger stimulus to reach it.
“The growth targets were not a surprise, but seem ambitious in view of only modest fiscal support whose headline numbers seem largely unchanged from 2023,” said Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management.
The world’s second-largest economy has stumbled since a brief rebound after COVID-19 as a protracted property crisis, tepid demand at home and abroad and geopolitical tension drag on activity.
China plans to run a budget deficit of 3% of economic output, down from a revised 3.8% last year. It also plans to issue 1 trillion yuan ($139 billion) in special ultra-long term treasury bonds, which are not included in the budget.
“Overall, the message from authorities remains the same, which may do little to lift investors’ sentiment - no bazooka stimulus package given debt concerns and an intention to keep growth steady,” said Alex Loo, macro strategist at TD Securities.
Chinese enterprises listed in Hong Kong slumped 2.6%, and tech giants tumbled 4.3%.
On the mainland, more than 80% of listed companies fell despite the benchmark gain, amid signs of suspected state-backed buying of some exchange-traded funds (ETFs) that track the blue-chip CSI 300, whose trading volume surged during the session.
Li also said Beijing would formulate plans to develop emerging industries, such as quantum computing and artificial intelligence (AI), and would keep striving to become self-sufficient in technology.
That lifted shares in AI, which rose as much as 2.3% before closing slightly lower.
Defence aviation stocks climbed 1.3%, as China also plans to boost defence spending by 7.2% this year.
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