Domestic Consumption Focus of Central Economic Work Conference Release
6 Min. Read Time
Central Economic Work Conference (CEWC) Release Overview
After the market close, it was announced that the Central Economic Work Conference (CEWC) started yesterday and ended today. President Xi and the Central Committee, i.e., the highest echelons of the China's government, basically the President and his cabinet in a US context, met to discuss the economy and the 2026 game plan. The release acknowledged economic challenges, which is a very good sign, as they aren’t putting their heads in the sand and telling you it is all rainbows and unicorns. The release places a strong emphasis on domestic consumption, contrasting with the 15th Year Plan (FYP), which highlights technology and AI more. The release addresses the real estate crisis, which is absent from the 15th FYP draft. The release does not mention anti-involution by name, but it does mention addressing “internal competition.” Below are key sentences and phrases, so please read them and come to your own conclusions.
- “domestic supply is strong while demand is weak”
- “continue to expand domestic demand”
- “focus on employment, stabilize enterprises, stabilize the economy”
- “We will continue to implement a more active fiscal policy”.
- “We will maintain the necessary fiscal deficit, total debt scale and total expenditure, strengthen scientific financial management, optimize the structure of fiscal expenditure, and standardize tax preferential policies and fiscal subsidy policies. “
- “We will continue to implement a moderate loose monetary policy.”
- “use various policy tools such as reserve requirement ratio reduction and interest rate reduction”
Key Tasks will include:
1) “we will adhere to the leadership of domestic demand and build a strong domestic market.” “implement the special action to boost consumption”
2) “we will adhere to innovation-driven development and accelerate the cultivation and expansion of new growth drivers.” “Deepen the expansion of 'Artificial Intelligence +' and improve the governance of artificial intelligence.”
3) “we will adhere to reform efforts and enhance the vitality of high-quality development.” “further rectify "internal competition"”
4) “we will adhere to opening up and promote win-win cooperation in various fields.”
5) addressing urban and rural needs
6) clean energy/environmental protections
7) raise employment
8) “ We will focus on stabilizing the real estate market, implementing city-specific policies to control the increase in supply, reduce inventory, and optimize supply, and encourage the acquisition of existing commercial housing for use in affordable housing.”
Key News
Asian equities were lower, with tech-heavy Taiwan and Shenzhen Composite both underperformed following Oracle’s earnings miss despite the US Fed cut.
The renminbi (CNY), China's currency, hit a 52-week high versus the US dollar at 7.06, though Hong Kong and Mainland China faded into negative territory on light holiday-season volumes. In theory, a stronger renminbi means the underlying companies are worth more, which explains the implicit currency exposure of US dollar and Hong Kong dollar-denominated Chinese shares.
Industrial supply chain company JINGDONG Industrial (7618 HK) listed today, closing flat despite hitting an intra-day low of -10.21% in morning trading after raising $383 million in its Hong Kong IPO.
Oracle’s miss weighed on investor sentiment, especially technology-focused semiconductors and growth stocks broadly, except for Meituan, which gained +1.5% as more of its shares are created for its unsponsored ADR, CATL, which gained +1.93%, and Xiaomi +0.96%. Alibaba fell -1.7% despite chatter that Meta was using its Qwen large language model (LLM) and Reuters stating that the company, along with Bytedance, will buy Nvidia chips. Tencent fell -0.25% on no news, though, after the close, they announced the purchase of 1 million shares.
The holiday season doldrums are evident in Stock Connect, as Mainland investors purchased a net $101 million worth of Hong Kong-listed stocks and ETFs. A similar situation exists in Mainland China, although arguably a steeper downdraft is driven by tech hardware, led by Foxconn, which fell -4.46%, as well as communication equipment, semiconductors, and software. The Mainland-listed Moore Threads gained a mere +28% today as the company noted its price-to-sales ratio is no. 1,000, and the company loses money after rising 723% since the IPO.
ZTE’s Hong Kong shares fell by 13.08% while its Mainland listed share class fell by 10% on a Reuters report that the company paid another $1 billion to the US government for foreign bribes on telecom deals. ZTE paid $2 billion back in President Trump’s first term on the issue. There is no word on whether the people who received the bribes are facing any consequences, which is interesting to me.
Polycrystalline Silicon futures increased +1.32%, in a good sign for reducing overcapacity in the solar industry.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0% |
| Hang Seng Tech | HSTECH Index | -0.8% |
| Hong Kong Turnover | HKTurn Index | -5.6% |
| Hong Kong Short Sale Turnover | HKSST Index | -29.2% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 14.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 101.02 |
| China (Shanghai) | SHCOMP Index | -0.7% |
| China (Shenzhen) | SZCOMP Index | -1.4% |
| China (STAR Board) | Star50 Index | -1.5% |
| Mainland Turnover | .chturn Index | 4.4% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.2% |
| Japan | NKY Index | -0.9% |
| India | SENSEX Index | 0.5% |
| Indonesia | JCI Index | -0.9% |
| Malaysia | FBMKLCI Index | 0.9% |
| Pakistan | KSE100 Index | -0.3% |
| Philippines | PCOMP Index | 0.5% |
| South Korea | KOSPI Index | -0.6% |
| Taiwan | TWSE Index | -1.3% |
| Thailand | SET Index | -1.3% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | 0.1% |
| Vietnam | VNINDEX Index | -1.2% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 73 | 109 |
| Advancing Stocks | 139 | 737 |
| Declining Stocks | 354 | 4367 |
| Outperforming Factors | Value, Dividend Yield, Low Volatility | |
| Underperforming Factors | Growth, Momentum, Liquidity | Liquidity, Growth, EPS Revision |
| Top Sectors | Real Estate, Healthcare, Financials | Staples |
| Bottom Sectors | Materials, Discretionary, Staples | Real Estate, Tech, Communication |
| Top Subsectors | Electrical Equipment, Consumer Durables/Apparel, Banks | Power Generation Equipment, Precious Metals, Banking |
| Bottom Subsectors | Semis, Consumer Staples Distribution, Construction Materials | Real Estate, Communication Equipment, Leisure Products |
| Southbound Connect Buys | Xiaomi (Large) | |
| Southbound Connect Sells | Alibaba (Moderate), Tencent, ZTE (Small), YOFC (Tiny) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -0.47 |
| Communication Services | 11 | -0.34 |
| Consumer Discretionary | 28 | -0.95 |
| Consumer Staples | 13 | -0.78 |
| Energy | 6 | -0.5 |
| Financials | 25 | 0.01 |
| Health Care | 15 | 0.08 |
| Industrials | 21 | -0.03 |
| Information Technology | 12 | -0.73 |
| Materials | 10 | -1 |
| Real Estate | 7 | 0.78 |
| Utilities | 12 | -0.21 |
| Mainland China Listed | 386 | -0.76 |
| Communication Services | 8 | -0.96 |
| Consumer Discretionary | 28 | -0.7 |
| Consumer Staples | 21 | 0.21 |
| Energy | 12 | -0.12 |
| Financials | 66 | -0.15 |
| Health Care | 33 | -0.57 |
| Industrials | 57 | -0.02 |
| Information Technology | 91 | -2.44 |
| Materials | 49 | -0.68 |
| Real Estate | 6 | -2.57 |
| Utilities | 14 | -0.07 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.2 |
| Alibaba HK | 9988 HK Equity | -1.7 |
| JD.com HK | 9618 HK Equity | -0.4 |
| NetEase HK | 9999 HK Equity | -0.6 |
| Yum China HK | 9987 HK Equity | 0.2 |
| Baozun HK | 9991 HK Equity | -0.3 |
| Baidu HK | 9888 HK Equity | 0.2 |
| Autohome HK | 2518 HK Equity | 1.4 |
| Bilibili HK | 9626 HK Equity | -0.1 |
| Trip.com HK | 9961 HK Equity | -1.1 |
| EDU HK | 9901 HK Equity | 0.2 |
| Xpeng HK | 9868 HK Equity | -2 |
| Weibo HK | 9898 HK Equity | 0.8 |
| Li Auto HK | 2015 HK Equity | -1.6 |
| Nio Auto HK | 9866 HK Equity | 0.7 |
| Zhihu HK | 2390 HK Equity | -1.6 |
| KE HK | 2423 HK Equity | 3.1 |
| Tencent Music Entertainment HK | 1698 HK Equity | -2.4 |
| Meituan HK | 3690 HK Equity | 1.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -1.7 |
| #N/A Connection | -0.2 |
| XIAOMI CORP-CLASS B | 1.3 |
| #N/A Connection | 1.5 |
| SEMICONDUCTOR MANUFACTURI-H | -0.2 |
| ZTE CORP-H | -13.1 |
| YANGTZE OPTICAL FIBRE AND-H | 11 |
| HSBC HOLDINGS PLC | 2.1 |
| PING AN INSURANCE GROUP CO-H | 0.5 |
| HUA HONG SEMICONDUCTOR LTD-H | -4.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | 3.1 |
| ZHONGJI INNOLIGHT CO LTD-A | 1.7 |
| ZTE CORP-A | -10 |
| VICTORY GIANT TECHNOLOGY -A | -4.7 |
| SUZHOU TFC OPTICAL COMMUNI-A | -2 |
| MOORE THREADS TECHNOLOGY C-A | 17 |
| #N/A Connection | -4.1 |
| SUNGROW POWER SUPPLY CO LT-A | -4.3 |
| CONTEMPORARY AMPEREX TECHN-A | 1.7 |
| SAI MICROELECTRONICS INC-A | -5.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.05 versus 7.06 yesterday
- CNY per EUR 8.26 versus 8.21 yesterday
- Yield on 10-Year Government Bond 1.84% versus 1.84% yesterday
- Yield on 10-Year China Development Bank Bond 1.90% versus 1.91% yesterday
- Copper Price +0.87%
- Steel Price -0.74%
