MSCI China Index erases 2023 gains as NPC underwhelms

The MSCI China Index slumped as much as 1.9% on Friday.

A key gauge of Chinese stocks erased all its gains for the year, weighed down by uncertainty over the economic outlook and a lack of fresh catalysts from the ongoing National People’s Congress.

The MSCI China Index slumped as much as 1.9% on Friday. The gauge is now down more than 16% from this year’s high in late January. The Hang Seng Index also erased its advance for the year.

Mixed economic data has dented optimism over an economic recovery in recent weeks after the nation’s reopening from Covid Zero curbs sparked a sharp three-month surge through January. Expectations for more policy stimulus were dashed this week after Premier Li Keqiang announced a growth goal of around 5% for this year, below most estimates.

“The key issue to monitor in the Chinese economy in the immediate months ahead will be the recovery, or the lack of it, in the residential property market,” Christopher Wood, global head of equity strategy at Jefferies Financial Group Inc., wrote in a note. “Base case on recent market action in China-related equities is a pause to refresh before the next upleg.”

JD.com Inc. was the biggest drag on the MSCI China gauge, dropping as much as 11% in Hong Kong, as the firm cautioned a consumption recovery will take time.