Chinese Stocks Rebound Despite Pandemic and Economic Challenges

The Chinese stock market saw positive annual gains in 2024, ending a three-year downturn. The CSI 300 Index grew by 15.9%, and the Shanghai Composite rose by 13.9%, driven by supportive policies, strong banking stocks, and a chip sector boost. However, challenges remain in factory activity and trade risks.

Chinese stocks closed 2024 on a high note, recovering from a challenging three-year downturn prompted by pandemic disruptions and economic concerns. The blue-chip CSI 300 Index surged 15.9%, marking the end of its losing streak since 2021, buoyed by robust banking stock performances and significant gains in the semiconductor sector.

The Shanghai Composite Index climbed 13.9% throughout the year, while Hong Kong's Hang Seng Index posted a 17.9% annual increase, both reversing prolonged periods of decline. Analysts at Value Partners emphasized that the surprising positive performance was aided by various supportive measures across monetary policy and capital markets, overshadowing lingering economic issues.

Despite these gains, the final trading day of the year saw a dip, with the CSI Index falling 0.6%. This decline reflected slowing factory activity and rising trade risks as China entered the final phase of policy-driven trading. Looking to 2025, experts anticipate dividend-paying stocks might continue to outperform even as U.S. political shifts, including Donald Trump's inauguration, could impact market stability.

(With inputs from agencies.)