"Next week in China" fra Lundgreen's Capital

Major Data Releases:

• 12 October: China to report September M0, M1 and M2 money supply growth rates
• 12 October: China to report September total social financing (TSF)
• 12 October: China to report September new renminbi loans
• 14 October: China to report September consumer price index (CPI)
• 14 October: China to report September producer price index (PPI)
• 14 October: China to report September external trade balance, import and export growth rates

The coming week will bring several major data releases for China markets following the National Day holiday, including September inflation and trade figures.

For producer prices, we expect rising raw material prices to lift year-on-year inflation to 4.5 per cent in September from 3.8 per cent in August. Commodity prices were broadly firmer as of end-September, although performance varied across categories: ferrous metals rose by 1.6 per cent while non-ferrous metals declined by 0.7 per cent. Crude oil price gains accelerated to 31.3 per cent while chemical product prices rose 13.2 per cent.

Energy prices are likely to be the main driver of the month-on-month increase in PPI. The average Brent crude price rose to around USD 100 per barrel in September, lifting domestic prices of diesel and other petroleum products. Coal prices also rose as domestic supply recovered slowly and port inventories declined.

For CPI, we expect year-on-year inflation to edge up to 1 per cent in September. Food prices recovered seasonally, with pork prices slightly increasing as demand improved amid holiday festivities while supply remained ample. Alongside a low base in 2025, this narrowed the year-on-year decline in pork prices to 16.9 per cent. However, fruit and vegetable prices may partly offset these gains as the impact of weather-related disruptions faded.

Meanwhile, higher international oil prices provided some support to energy prices. Our CPI forecast is broadly in line with consensus expectations, with overall price pressures likely to remain moderate.

On trade, we expect year-on-year exports growth to accelerate to 30 per cent in September from 25 per cent in August, while import growth may ease to 25 per cent from 28.2 per cent previously. Overall trade activity is likely to remain robust, with the monthly surplus potentially reaching around USD 127 billion. The composite freight rate index continued to rise, while some manufacturers may have frontloaded shipments ahead of the National Day holiday, providing a temporary boost to September exports.

Chinese equities traded lower as Mainland markets reopened. As of Thursday, 8 October, the first mainland trading session of the week, the MSCI China Index was down 0.62 per cent, while the Shanghai Composite fell by 0.79 per cent. The Shenzhen Component declined 2.07 per cent and the ChiNext Index lost 3.15 per cent. Large-cap shares outperformed small- and mid-cap peers, while value outperformed growth.

The decline suggests a cautious return from the holidays, but the opening session alone offers limited guidance on the subsequent market direction. Short-term post-holiday moves can reflect overseas market developments, policy announcements during the break, and shifts in investor sentiment, rather than a change in underlying fundamentals.

Looking ahead, technology shares and other sectors part of China's “new quality productive forces” continue to benefit from supportive industry fundamentals, although the timing of investment opportunities may differ. From early October to early December, the AI supply chain is expected to see a series of catalysts, including updates to technology roadmaps, earnings announcements that test delivery against expectations, and reassessments of valuations as commercialisation progresses. Investor attention may therefore shift away from the scale of capital expenditure towards evidence of incremental growth and returns on investment.

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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