China stocks stage modest rebound, tourism sector leads

China stocks rebounded slightly on Tuesday, putting an end to a five-day losing streak. The market saw tourism companies leading the gains, fuelled by increasing enthusiasm for winter travel. Additionally, some investors seized the opportunity to buy the dip, particularly after blue-chip shares experienced a nearly five-year low in the previous session.

The blue-chip CSI 300 Index and the Shanghai Composite Index both saw a modest uptick of 0.3 per cent by the midday recess. Hong Kong's Hang Seng Index also joined the positive momentum with a 0.3 per cent gain, while the Hang Seng China Enterprises Index remained almost flat.

Tourism-related stocks rose riding on the wave of a resurgence in winter tourism, which is proving to be a vital boost for economically weak regions in the northern parts of China. The rebound in winter tourism is particularly significant for areas struggling to recover from the prolonged impact of the pandemic, contributing to a much-needed uplift in domestic consumption.

The CSI Tourism Thematic Index saw a robust 4.1 per cent jump, propelled by the stellar performance of winter tourism-themed stocks such as Changbai Mountain Tourism Co and Dalian Sunasia Tourism Holding, both reaching their daily upper limits with a 10 per cent surge.

While the broader market experienced gains, the focus remains on global factors, with Asian stock indexes generally higher following a tech-driven surge on Wall Street. Investors are eagerly awaiting the next set of U.S. inflation numbers scheduled for this week, which could offer insights into the potential timing of interest rate cuts by the Federal Reserve.

Ting Lu, Chief China Economist at Nomura, commented on the recent market dynamics, noting the risk-off move across China's asset classes in the first week of 2024. Lu anticipates a possible cut in the benchmark lending rates by the People's Bank of China (PBOC) next Monday in response to these trends.

In terms of investment, foreign investors demonstrated interest in Chinese shares, buying a net 1 billion yuan ($139.67 million) on the day. Meanwhile, in Hong Kong, tech giants faced a minor setback, with food-delivery giant Meituan experiencing a 3.3 per cent decline. The market continues to navigate the evolving landscape, reacting to both domestic and global factors shaping investor sentiment.

(With Reuters inputs)