Chinese stocks poised to recover after break

Chinese stocks look poised for a strong open when onshore traders return from the Lunar New Year break, with buoyant travel and tourism data seen bringing much-needed relief to one of the world's worst-performing major markets.

With trading in mainland China shut from February 9 to 16, investors will likely take cues from gains seen for the country's shares listed offshore.

A gauge of stocks in Hong Kong rallied nearly 5 percent since it reopened last Wednesday while the Nasdaq Golden Dragon China Index jumped 4.3 percent for the week, underscoring room for onshore shares to play catch-up.

Spending patterns during one of China's most important holidays suggest consumption has revved up even as the broader economy struggles with deflation and a property crisis. Market watchers expect the stream of positive data to give equities at least a short-term boost, lending a helping hand to authorities' efforts to revive investor confidence. A big question, however, remains on the sustainability of any rebound in the face of deeper economic woes.

"The early read from Chinese New Year data, from holiday hotel sales to Macau visit numbers, points to bright spots in service-related industries," said Linda Lam, head of equity advisory for North Asia at Union Bancaire Privee. "A-shares should open on a stronger note, continuing the share price recovery on the back of state support," she said, referring to Chinese stocks traded in the mainland.

A swath of Chinese stocks in Hong Kong surged in response to early holiday data showing a 61 percent gain in rail trips from a year earlier, when the country was experiencing a widespread Covid outbreak. Online hotel bookings and spending on delivery giant Meituan (3690) also saw hefty gains.

Meanwhile, BYD (1211) issued a report vowing to launch more high-quality vehicles and buyback shares when necessary, in line with the China Securities Regulatory Commission's recent call for "safeguarding company value."