China Stocks Surge Despite Weak Economic Data: A Resilient Market

China's stock market demonstrated remarkable resilience this week, logging its largest weekly gain in nine months, despite a slew of disappointing economic indicators. The blue-chip CSI300 Index rose by 0.7%, while the Shanghai Composite Index gained 0.8%, contrasting with a 1% fall in Hong Kong's benchmark Hang Seng.

As China's factory output growth hit an eight-month low in July and retail sales sharply decelerated, policymakers are under pressure to revitalize the economy. Analysts suggest the weak data may reignite hopes for stimulus measures, especially in consumption and property sectors, to achieve the targeted 5% GDP growth.

Meanwhile, investor appetite remains robust, with the Shanghai Composite Index hitting its highest level since December 2021, buoyed by extensive margin financing. Onshore investors also showed confidence by purchasing a record HK$36 billion in Hong Kong shares via the Stock Connect scheme. Amidst these dynamics, China's real estate sector saw slight improvements, as local governments incentivize homebuying.

(With inputs from agencies.)