Weak domestic demand and export overcapacity continues to be the prevalent theme at play in China, keeping market sentiment somewhat subdued, as investors need further evidence of resurgence of ailing domestic consumption, before fully committing capital into the Red Dragon.

The latest trade data report for the month of November showcased the expansion of the nation’s exporting capacity after last month’s slip up. China managed to reinforce its trade diversification sequence, with outbound shipments reaching the shores of nearby ASEAN nations at a faster rate than before, whereas shipments towards the US continue to dwindle, albeit the renewed pledges by both nations to foster trade flows between each other.

Trade data offered support for the Chinese Yuan, as exports in November topped analysts’ forecasts topping the 3.8% reacceleration expectation from last month’s unnerving -1.1% contraction and posted a solid 5.9% growth rate, signalling strong overseas demand for Chinese products. The Red Giant managed to strengthen ties and trade flows with Australia (35.8%), the EU (14.8%), Taiwan (12.8%), nearby ASEAN nations (8.2%) as well as Japan (4.3%) and South Korea and the most sought out for items from these nations’ were integrated circuits, fertilizer, cars and LCDs.

As for imports, activity rose for a sixth consecutive month, achieving a notable milestone, yet overall expectations for a return towards strong demand are far from being reached. Import growth still lags behind the 2.8% forecast, reinforcing beliefs that consumers’ confidence remains materially weak and business spending remains suppressed and cautious. Analysts note that, Purchases in 2026 are expected to remain modest, with growth hinging on domestic demand, policy support, and global trade relations.

Investors now await details from the annual Central Economic Work Conference, seeking guidance on 2026 key policy directions, the finalized agenda and areas of importance for the year ahead. Meanwhile, the Politburo signalled plans to boost domestic demand and support the economy with more proactive policies in 2026, earlier today, improving sentiment.

Technical Analysis

HSI Chart – The Hang Seng Index holds year-date-highs ahead of key policy releases from the Politburo

Resistance: 26300 (R1), 27400 (R2), 28500 (R3)
Support: 24875 (S1), 23800 (S2), 22700 (S3)