(News Bulletin 247) – Chinese markets are starting 2025 on a dull note, under pressure after the publication of mixed statistics on manufacturing activity in December. The prospect of an increase in trade tensions between Washington and Beijing also maintains this climate of mistrust.

Chinese stock markets took their revenge in 2024 after having suffered a series of declines in recent years. The CSI 300 index, which brings together the largest capitalizations on the Shenzhen and Shanghai stock exchanges, rose 14.7% last year, while Hong Kong’s Hang Seng index rebounded 17.7%, ending four consecutive years of losses.

The country’s authorities had decided to take several measures to support a sluggish Chinese economy and restore purchasing power to households. These initiatives then benefited Chinese stocks over the latter part of 2024.

“We need to deepen reform, expand high-level opening-up, better coordinate development and security, (and) implement more proactive and effective macroeconomic policies,” President Xi Jinping said at a meeting on Tuesday. official New Year’s reception, according to official media reported by AFP.

Worst start to the year since 2016

But nonetheless, at the start of 2025, the mood is gloomy. Investors in the Middle Kingdom looked gloomy this Thursday, after the publication of lower-than-expected data on the direction of the Chinese manufacturing sector for the month of December.

The manufacturing PMI index calculated by Caixin/S&P Global actually contracted by one point in December, to 50.5 points compared to 51.5 points in November. Which constitutes a disappointment, the market expected an increase to 51.7 points for the past month, but remains above the threshold of 50 points which separates contraction and expansion of activity. China is still struggling with sluggish domestic demand and a crisis-ridden real estate sector.

And on the markets, these disappointing figures are freshly received. The Hang Seng China Enterprises Index begins the year on a very bad note, with a decline of 3.14%. This is a negative signal, as the Hang Seng China Enterprises Index serves as a benchmark for reflect the overall performance of mainland Chinese securities listed in Hong Kong.

For its part, the Chinese benchmark index CSI 300, which brings together stocks listed in Shanghai and Shenzhen, fell by 2.9% this Thursday to 3,820.40 points, and recorded its worst start to the year since 2016, notes Bloomberg.

Technical factors and fear about customs duties

This decline was also exacerbated by technical factors. “The sharp decline in the CSI 300 during the final session of 2024 also pushed the index below the 60-day moving average, a closely watched technical threshold, which likely led to further selling by some funds “, also explains Bloomberg.

“It’s a little troubling that investors are starting the new year in a cautious mode, as this comes after clearer stimulus signals from Beijing at its December policy meetings,” Homin Lee, a strategist, told Bloomberg. senior macroeconomics at Lombard Odier.

In addition to these concerns about the country’s economic recovery, the prospect of an increase in trade tensions between the United States and China is also rekindling investors’ fears.

Remember that American President-elect Donald Trump, who will be inaugurated on January 20, declared upon his election that he wanted to strengthen customs duties on Chinese imports.

“Many avoid too much exposure to stocks [chinoises] ahead of Trump’s inauguration, which is close to the Lunar New Year holiday,” Liu Dejun, a fund manager at Beijing Kaiyuan Private Fund Management Co, told Bloomberg.

On the Paris Stock Exchange, luxury stocks, very exposed to the Chinese economy, are also suffering the blow. Hermes lost 2.9%, Kering returned 2.7% and LVMH fell by 2.2%.