(Bloomberg) — Chinese stocks trimmed declines during afternoon trading as traders digested President Xi Jinping’s speech, which offered support for the tech sector but disappointed investors hoping for signs of a shift away from Covid Zero.
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The benchmark CSI 300 Index traded 0.1% lower as of 1:43 p.m. local time after sliding as much as 0.9% in the morning. A gauge of Chinese equities listed in Hong Kong fell 0.7%, having earlier slumped more than 2%.
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China stock traders have been looking to the leadership gathering for fresh market impetus after suffering losses that have been among the worst in the world. Xi’s renewed pledge for tech self-reliance offered some reprieve to the sector, but overall, his defense of the signature Covid Zero policy and the absence of stimulus signals for the property sector came as a letdown.
The onshore benchmark is down about 22% this year as investors grappled with a slowing economy and rising hostility between the US and China. Economists surveyed by Bloomberg predict growth of just 3.3% this year, the second-weakest pace in more than four decades.
Read: Xi Gives Little Reassurance Big China Economic Risks to Ease
“I don’t think there was anything too surprising out of the speech, largely neutral, but it is likely that the market was hoping for more indication of stronger support on the economic growth front, rather than general status quo,” said Christina Woon, investment director for Asia equities at abrdn plc.
Information tech and defense stocks were the bright spots amid Monday’s lackluster market moves, as the sectors garnered strong rhetoric from Xi’s two-hour address. The CSI 300 Information Technology Index gained as much as 1.8%.
Xi vowed to “resolutely win the battle in key core technologies” in his opening speech, suggesting more state support to boost the sector. This follows the Biden administration’s restrictions on the sale of chip-related technology to Chinese customers, striking at the foundation of Xi’s efforts to develop the sector.
Defense stocks including AVIC Shenyang Aircraft Co. and AECC Aviation Power Co. rallied, while a Bloomberg index of Chinese developer shares fell nearly 1%.
Meantime, Hong Kong’s benchmark Hang Seng Index slipped 0.5%, paring a 1.7% decline.
With Xi’s speech providing broad directions on China’s long-term policy path, investors will be looking for more detailed signals to help fill in the detail over the coming weeks.
“The main takeaways of the speech were self-congratulatory anecdotes over current policies,” wrote Ales Koutny, emerging markets portfolio manager at Janus Henderson Investors. “As no imminent policy shift has been explicitly confirmed or denied, investors will be on the lookout this week for hints about the extent of Xi’s grip over the party.”
(Updates with latest market moves)
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