SHANGHAI: China stocks hit two-week highs on Monday and Hong Kong shares also climbed as Beijing stepped up efforts to stabilise markets, while hopes of early interest rate cuts by global central banks aided sentiment further.
** China’s blue-chip CSI300 Index rose 1.3% by the lunch break, while the Shanghai Composite Index gained 0.9%. Hong Kong’s stock benchmark Hang Seng Index jumped 1.7%.
** Chinese mutual fund companies are rushing to buy their own stock products, as the country’s securities regulator vowed fresh measures to guide long-term capital into the stock market.
** Also helping sentiment was Chinese premier Li Qiang saying on Sunday that China would further expand market access and increase imports.
** China’s top leaders have vowed to revive confidence in the stock market, with the Ministry of State Security said on Friday that financial stability is a key part of national security.
** The rally comes as Asian shares rose for a fourth straight session after markets moved to price in earlier rate cuts in the US and Europe.
** But some analysts cautioned that China’s disappointing Purchasing Managers’ Index (PMI) data points to a fragile economic recovery.
China stocks rise as services activity picks up
** “We interpret the October PMI data as evidence that more policy support is needed for sustained growth momentum as fundamental demand remains soft,” Goldman Sachs wrote.
** In addition, “with interest rates in China ‘lower for longer’ while interest rates outside of China ‘higher for longer’, capital outflow pressures are likely to persist”.
** China’s latest balance of payments data shows that the country recorded its first-ever quarterly deficit in foreign direct investment (FDI).
** Stocks rose across the board.
** China’s IT sector and healthcare stocks jumped 3%, while the STAR 100 Index rose 3.5%. Tech stocks in Hong Kong surged nearly 4%.
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