"Next week in China" fra Lundgreen's Capital

Major Data Releases:

• 17 November: China to report October Total Social Electricity Consumption (TSEC)
• 18 November: China to report October import volumes for pipeline natural gas
• 18 November: Hong Kong to report August to October unemployment and underemployment statistics
• 20 November: China to report November 1-year and 5-year loan prime rates (LPR)
• 20 November: Hong Kong to report October Consumer Price Index (CPI)
• 21 November: Macau to report October CPI

Next week is expected to be relatively quiet in terms of major data releases for China markets.

For TSEC, an indicator for economic activity, we anticipate cumulative year-on-year growth to come in around 3.05 per cent for January-October, marking a deceleration from the previous 4.5 per cent pace. While this reflects a moderation in headline growth, underlying drivers point to a shift in consumption patterns. Notably, China’s total electricity usage surpassed 1 trillion kilowatt-hours (kWh) in both July and August, a level equivalent to Japan’s annual consumption.

This surge was driven not only by elevated residential demand amid record summer temperatures, but also by greater electricity needs from data centres and the charging of new energy vehicles (NEVs). China’s NEV fleet reached 31.4 million units by end-2024. Assuming average annual mileage of 15,000 kilometres (kms) and energy consumption of 15 kWh per 100 km, NEVs are estimated to have consumed approximately 70.65 billion kWh in 2024. Looking ahead, total charging demand is projected to consistently grow to account for 1.9 per cent of national electricity consumption this 2025 and reach a 4.6 per cent share to total power demand by 2030. Meanwhile, computing power centres continue to race ahead, with a five-year average growth rate of 15.08 per cent against 6.1 per cent for broader power consumption. By 2026, electricity demand from AI and computing centres is expected to reach 300 terawatt-hours, underscoring the structural shift towards digital infrastructure.

On the supply side, China’s total installed power generation capacity reached 3.72 billion kilowatts as of end-September, up 17.5 per cent year-on-year. Grid-connected wind and solar capacity now account for 46.0 per cent of total capacity, however, coal power continues to exhibit reduced output despite capacity expansion. In the first three quarters, total power generation declined by 2.4 per cent year-on-year with thermal and hydropower output falling, while wind and solar contributed nearly all of the incremental generation.

We see limited scope to adjust China’s LPR this November, constrained by banks’ net interest margins that hover around 1.4 per cent. This means market loan rates will remain stable.

China stocks continued their upward momentum. As of Thursday, 13 November, the MSCI China Index rose 2.84 per cent week-on-week. The Shanghai Composite gained 0.80 per cent, the Shenzhen Component advanced 0.54 per cent, while the ChiNext Index slightly slipped by 0.20 per cent. Performance across large-, mid-, and small-cap segments was broadly consistent, with value stocks slightly outperforming growth peers.

Looking ahead to 2026, the first year of China’s 15th Five-Year Plan, we expect the A-share market to maintain a gradual bull trend, supported by policy tailwinds and improving fundamentals. Key investment themes include frontier technologies such as artificial intelligence and energy, alongside structural reforms for social welfare and consumption rebalancing. These could unlock household savings and deepen capital markets.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.

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