By Ambar Warrick
Investing.com -- Chinese stock markets rose sharply on Monday as they resumed trade after the Lunar New Year holiday, while a commitment from the government to boost spending and support economic growth also aided sentiment.
The Shanghai Shenzhen CSI 300 index rose 1.3%, while the Shanghai Composite index added 0.6%, with most sectors trading positively. Automobile and industrial stocks were the best performers in early trade, while energy stocks retreated.
State media reports suggested that retail travel and spending recovered sharply to near pre-pandemic levels during the holiday, boding well for the Chinese economy. 2023's Lunar New Year celebrations were the first in three years to occur without any anti-COVID restrictions, after the country began scaling back its strict zero-COVID policy in December.
China had recently also reopened its international borders, cementing a move away from the zero-COVID policy that had rattled the economy since 2020.
Focus this week turns to key business activity readings, which are expected to have improved in January from the prior month as the country relaxed more anti-COVID measures.
But overall activity is still expected to remain in contraction territory, as the world’s second-largest economy reels from the aftermath of strict anti-COVID restrictions through 2022. Said restrictions had also caused a sharp slowdown in Chinese economic growth, although the country still fared better than expected during the fourth quarter.
China is struggling to shore up growth, with the government having rolled out a slew of stimulus measures through 2022 to support the economy. Reports over the weekend said that the country's State Council vowed to boost local economic growth and consumption this year.
Rising COVID-19 infections in the country are also expected to delay a bigger economic recovery, as the country grapples with its worst-yet COVID-19 outbreak.
But health authorities recently reported a sharp drop in new deaths from the virus, even as the Lunar New Year holiday increased the chances of the virus being transmitted.
Hong Kong stocks lagged their Chinese peers, with the Hang Seng index down 0.5% on weakness in major technology stocks, before a slew of key earnings this week. Broader Asian stocks were also muted in anticipation of a Federal Reserve meeting this week.