SHANGHAI: Shanghai and Hong Kong stocks closed at near two-month highs on Monday, as Beijing and Shanghai steadily return to normal life from China’s biggest COVID-19 outbreak in two years, with sentiment boosted by measures to revive the country’s economy.
The blue-chip CSI300 index rose 1.9% to 4,166.09, the highest level in seven weeks, while the Shanghai Composite Index gained 1.3% to 3,236.37, the highest since April 8.
The Hang Seng index rose 2.7% to 21,653.90, the highest since April 8, while the China Enterprises Index gained 3.2%, to 7,499.97 points.
Beijing will further relax COVID-19 curbs by allowing indoor dining, while Shanghai has lifted most of the restrictions in recent days.
“Reopening in Shanghai was a positive catalyst in itself, but the immediate impact is more on sentiment than on fundamentals,” said Morgan Stanley analysts in a note. “We continue to advise patience.” China’s central bank will strengthen the implementation of its prudent monetary policy and bring forward steps to support the economy, vice governor Pan Gonsheng said.
US Commerce Secretary said on Sunday that President Joe Biden has asked his team to look at the option of lifting some tariffs on China to combat the current high inflation.
The Caixin services purchasing managers’ index (PMI) rose to 41.4 in May from 36.2 in April, but is still below the 50-point mark that separates growth from contraction.
“We expect faster growth in the services sector in June as lockdowns have gradually eased,” said Iris Pang, Chief Economist, Greater China at ING in a note. “However, we remain concerned that there may be further lockdowns ahead.”
The tech-focused STAR Market added 3.9%, extending gains from a 4.7% jump in the previous session, amid speculations that the market will lower its investor threshold.
New energy shares soared 5.2%, with new energy vehicles surging 5.6% and photovoltaic firms up 4.6%.
Biden will declare a 24-month tariff exemption on Monday for solar panels from four Southeast Asian nations after an investigation froze imports and stalled projects in the United States, sources told Reuters.
However, the CSI 300 Real Estate Index lost more than 2%.
Tech giants trading in Hong Kong rose 4.6%, with food-delivery giant Meituan up nearly 10% as its quarterly revenue surpassed analysts’ estimates.
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