ST Note - China 20th Party Congress Meeting ST Note - China 20th Party Congress Meeting ST Note - China 20th Party Congress Meeting

ST Note - China 20th Party Congress Meeting

Chun Fei Lin

Sales Trader

Summary:  The 20th Congress of the Chinese Communist Party will open on 16th October. Mr. Xi’s speech at the opening ceremony will provide importance directions about the futures of Chinese and global businesses in China.


The 20th National Congress of the Chinese Communist Party will start on 16th October. It is held every 5 years and usually last for a week. Mr. Xi Jinping is expected to secure a third five-year term as China's top leader and continue to be in the power until at least 2027.

China’s economy, the second largest in the world is in turmoil now. China’s zero tolerance approach to Covid-19 have hurt consumer demand and stalled businesses. Further, the property market which contributed about 25% of the country’s economic output over the last 10 years is deteriorating. The billions of dollars spent have failed to help stimulate housing demand. The zero Covid-19 policy has also hurt consumer demand and impacted businesses. Foreign investment has also weakened during the pandemic. All these factors has hurt China’s economy, with growth coming in at just 0.4% for the period from April 2022 to June 2022 compared to the same period in 2021 and this run rate will likely lead to lower than expected growth (5.5%) this year.

Mr. Xi’s speech at the opening ceremony will provide an important direction about the future of Chinese and global businesses in China.

  • How Mr. Xi defines the term “common prosperity” will be a key focus. It is possible for him to include a more progressive tax system, social spending program and deregulation of small business.
  • The Chinese official media has published numerous articles on border reopening. It is a possibility that Mr. Xi would announce during the party congress meeting about easing back on the zero-Covid-19 policy. Any hints on gradual loosening of the policy will be taken as positive for the market.
  • Another big uncertainty will be whether China will pursue some kind of military action against Taiwan. Any vague comment on the progress for trying to bring Taiwan under the mainland China’s political control could post a negative impact on the financial confidence in both Taiwan and China.
  • The most important task is to elect the party’s leaders. Hu Chunhua is seen as having a stronger political base than Wang Yang as he is younger (59 years old) to be a potential successor to Mr. Xi. However, many businessmen and experts think Mr. Xi is more likely to choose Mr. Wang who pose no potential political treat to him.

China A50 Index futures (CNV2) is down 40% since hitting the high in Feb 2021, P/E is around 11.96.
Hang Seng Index futures (HSIV2) is down 40% since the high in Feb 2021, P/E is around 6.31.
Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.