Hong Kong extends best start to year in decade, mainland markets rise as China’s economic growth in 2020 beats expectations

China’s economy grew 2.3 per cent in 2020, its lowest annual growth rate in 45 years, but was still higher than forecast

The Hang Seng Index rose 1 per cent on Monday, while the Shanghai Composite Index added 0.8 per cent

Reading Time:3 minutes

China is expected to be the only Group of 20 nation to report positive economic growth in 2020. Photo: Xinhua

Published: 10:51am, 18 Jan 2021Updated: 5:58pm, 18 Jan 2021

The Hong Kong and mainland markets rose on Monday, on economic data from China that showed growth in the world’s second-largest economy had beaten expectations – despite rising at its slowest pace in 45 years.

The Hang Seng Index rose 1 per cent to 28,862.77, extending its best start to the year in a decade. The Shanghai Composite Index also added 0.8 per cent.

China’s coronavirus-hit economy grew by 2.3 per cent in 2020, its lowest annual growth rate in 45 years, said the National Bureau of Statistics. However, the growth rate was higher than the 2.1 per cent expansion projected by a median forecast made by analysts surveyed by Bloomberg.

The country was, in fact, expected to be the only Group of 20 nation to report positive economic growth in 2020, even though its growth rate last year was the lowest since 1976, when China’s economy shrank by 1.6 per cent.

“China’s stronger than expected GDP results have given markets a confidence boost,” said Stanley Chan, director of research at Emperor Securities.

Investment bank China Renaissance maintained its forecast for China’s economy to grow by 8.4 per cent in 2021. “Considering China’s growth potential in the global context, we think Chinese equities are, in aggregate, reasonably valued and in line with their long-term averages on a forward basis,” China Renaissance analysts led by Bruce Pang said in a note.