China stocks rise despite upcoming holidays

SHANGHAI: China stocks rose on Thursday with healthcare and information technology companies leading the gains, as strong foreign inflows helped sentiment, despite thin trading volumes ahead of the Lunar New Year holidays.

China’s blue-chip CSI 300 Index closed up 0.6%, and the Shanghai Composite Index added 0.5%.

Hong Kong’s Hang Seng Index slipped 0.1%, while the Hang Seng China Enterprises Index lost 0.4%.

Other Asian stocks struggled to make headway, after weak US consumer data stoked recession worries.

Chinese drugmakers rushed to make anti-fever medicines and other treatments for COVID-19, after President Xi Jinping said he was worried about an influx of holiday travellers to rural areas ill-equipped to deal with sudden outbreaks.

Shares in healthcare and information technology added 2.2% and 2.6%, respectively, to lead the gains. The week-long holiday officially starts on Jan. 21, and economists are scrutinising the holiday season for hints of a consumption rebound in the country.

Foreign investors bought a net 9.4 billion yuan ($1.39 billion) of China shares via the Stock Connect scheme in a 12th buying streak. In less than three weeks of 2023, foreign buying of Chinese stocks had exceeded last year’s total.

Separately, a Reuters survey showed that China is expected to keep benchmark lending rates unchanged for a fifth month in January.

Tech giants listed in Hong Kong lost 1.7%, with short video operator Kuaishou Technology declining 6% after key shareholder unloaded HK$3.78 bln ($482.99 mln) shares.

“Both active managers and asset owners tend to believe the initial phase of the market rally post a trough is almost done, and they were either taking some profits via selling ETFs or rotating from China offshore to onshore,” said Morgan Stanley in a note.

They added most hedge fund managers were keen to continue exploring investment opportunities in the market and only thinking of where to rebalance but not when to sell, believing “the market will soon transit to be more driven by fundamental-related factors.”