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The Impact of China’s Golden Week Holiday on Economic Recovery

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Chinaโ€™s national Golden Week Holiday in early October yielded mixed results for the economy, falling short of government expectations. While the holiday provided a boost to spending, stock markets remained subdued due to various factors including consumer spending and home sales data, as well as international conflicts.

Stock Market Performance

Following the Golden Week Holiday, the Hang Seng Index in Hong Kong closed 0.18% higher at 17,517.40, despite a suspension of morning trading due to a typhoon. In Shanghai, the CSI 300 Index was 0.13% lower at 3,684.74.

Golden Week Sales Figures

The Chinese government had set a target of 900 million additional trips during the Golden Week holiday, with an expected 782.5 billion RMB ($107.4 billion) in sales. However, the actual figures fell slightly short of expectations, with 826 million domestic trips generating 753.4 billion RMB in revenue. Nonetheless, sales were double those of the previous year and 1.5% higher than in 2019, prior to the Covid-19 pandemic.

Impact on Property Sales

During the holiday week, property sales in Chinaโ€™s 35 largest cities fell by 17% compared to the same period last year, while existing home sales were down by 8%. Among the top 22 cities, new home sales experienced a decline of 31%, and existing home sales plummeted by 84% compared to the average number of sales recorded in a typical week in September, according to Chinaโ€™s regulator, CRIC.

Analystsโ€™ Outlook

Goldman Sachs Group Inc. (GS) predicted that Chinaโ€™s government would continue its policy of credit easing to further stimulate the economy. However, analysts, including Chen Wenjing, associate research director at China Index Holdings, cautioned that a housing market recovery would take longer than in previous down cycles. Wenjing suggested that if more easing measures were implemented in the near future, the home market might reach its bottom in the first half of next year.

Investor Sentiment

While some investors expressed caution, $12 billion fund manager Mathews International Capital Management indicated that it was buying Chinese stocks once again. The fund manager pointed to the MSCI China Index, which had an attractive price-to-earnings ratio of 11.44x, the lowest in five years. Andy Rothman, a fund strategist at Mathews International Capital Management, acknowledged the existence of structural issues in Chinaโ€™s economy, such as local government debt, the property market, and demographics, but emphasized that these issues would not necessarily cause a crisis or collapse.

Notable Developments in the Real Estate Sector

Chinese business newswire Cailian reported that Country Garden Holdings Limited (CTRYY) may announce a debt restructuring plan, while Hysan Development Company Limited (HYSNY) published a prospectus for a $4 billion debt offering. These developments suggest ongoing challenges in the real estate sector.

Electric Vehicle Industry

China Evergrande New Energy Vehicle Group Limited (EVGRF), a spin-off of China Evergrande, experienced a 9% drop in its stock price after the lifting of a trading suspension. The company is currently negotiating the terms of an outstanding debt tranche held by an investor from the United Arab Emirates (UAE). Other notable electric vehicle manufacturers, such as XPeng Inc (XPEV), Li Auto Inc (LI), and NIO Inc. (NIO) also experienced declines in stock prices.

However, BYD Company Limited (BYDDY) reported strong sales for the new premium edition of its Yangweng U8 model at the end of September. The company expects to deliver over 4,000 models which sold for over 1 million RMB starting this month.


The impact of Chinaโ€™s Golden Week Holiday on economic recovery prospects has been mixed. While the holiday provided a boost to domestic trips and sales, the property market and stock markets have faced challenges. Analysts remain cautious, but some investors see opportunities in the Chinese market. The real estate sector and the electric vehicle industry remain areas of interest and concern as the country continues its recovery journey.

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