China Market Update: Mainland Remains Moody

Asian equities experienced mixed performance on September 18, 2024, amid light trading volumes and a weaker US dollar, as investors awaited the US Federal Reserve's interest rate decision. Notably, Hong Kong and South Korea markets were closed for the Mid-Autumn Festival and Chuseok, respectively. Consumer staple stocks faced downward pressure, particularly liquor companies Kweichow Moutai and Wuliangye Yibin, which saw declines of 2.86% and 1.38%, respectively, due to concerns over weak order volumes for the upcoming October vacation. The People's Bank of China (PBOC) emphasized its focus on the 7-day repo rate, currently at 1.70%, indicating a need for policymakers to take more aggressive measures to stimulate the economy. In a related development, Prime Minister Li Qiang led a State Council meeting that centered on private equity, while Vice Premier He Lifeng engaged in discussions with the UK's Chancellor of the Exchequer, emphasizing the importance of UK-China economic dialogue. On the sector performance front, Real Estate, Energy, and Consumer Discretionary sectors emerged as the top performers, gaining 2.93%, 2.75%, and 2.09%, respectively. Conversely, Consumer Staples, Information Technology, and Communication Services sectors lagged, with declines of 1.66%, 1.11%, and 0.25%. The Northbound Stock Connect was closed for the day, and both the Chinese Yuan and the Asia Dollar Index showed strength against the US dollar. In commodity markets, copper prices increased, while steel prices fell, reflecting ongoing fluctuations in demand and supply dynamics. Overall, the market sentiment remains cautious as investors navigate through various economic signals and geopolitical factors.