Traders pin hopes on China’s top annual political gathering for stock-boosting stimulus in post-Covid-19 era

Historically, stocks have fallen by an average of 0.2 per cent during NPC sessions in the past two decades

China may use descriptive growth targets in post-Covid-19 era after the economy contracted last year for first time since 1976

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Flags are seen at Tiananmen Square and atop the Great Hall of the People during the 13th National People's Congress in Beijing in March 2019. Photo: Xinhua

Published: 5:43pm, 7 May 2020Updated: 7:20pm, 7 May 2020

Investors are looking forward to China’s top-level annual legislative meeting later this month for insight into how policymakers will steer the economy through the slump caused by the coronavirus pandemic. Their early optimism may disappoint.

The government announced last month that the National People’s Congress (NPC) will convene on May 22 after keeping the coronavirus outbreak under control, news that fanned a buying spree in stocks linked to infrastructure construction and investments seen as critical to resuscitating the economy.

The Shanghai Composite Index has advanced 2.2 per cent since April 29 when Xinhua reported the new meeting date.

Historically, stock performances tend to be subdued over the duration of NPC meetings. The Shanghai Composite fell by an average of 0.2 per cent over the past two decades. It rose 0.9 per cent during the last meet. There were only 12 winning years over the past two decades.

The annual political gathering, which typically kicks off in early March for two weeks, was delayed because of the viral outbreak. Delegates typically deliberate on reports and an array of targets from economic growth to budgets.

The exercise will take a greater significance this year, coming after the economy contracted for the first time since the end of the Cultural Revolution in 1976. Other economic reports showed recovery from that slump has been uneven at best.